SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1993
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ________________ to __________________

Commission File Number 1-10140
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AMERICA WEST AIRLINES, INC.
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(Exact name of Registrant as specified in its charter)

Delaware 86-0418245
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034
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(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (602) 693-0800
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Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange on which
Title or class registered
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Common Stock, $.25 par value Pacific Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:

7-3/4% Convertible Subordinated Debentures due 2010
7-1/2% Convertible Subordinated Debentures due 2011
11-1/2% Convertible Subordinated Debentures due 2009
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

At March 15, 1994, the aggregate market value of common stock held by
non-affiliates of the Registrant was approximately $60.7 million, and the
aggregate preference value of preferred stock held by non-affiliates of the
Registrant was $1 million.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE LAST FIVE YEARS

Indicate by check mark whether the Registrant has filed all
documentation and reports required to be filed by Sections 12, 13, or 15(b)
of the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ] NOT
APPLICABLE

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.

25,292,102 shares of Common Stock outstanding on March 15, 1994
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DOCUMENTS INCORPORATED BY REFERENCE

Materials have been incorporated by reference into this Report from the
following documents: information and documents from the Registrant's Form
S-1 Registration Statements (Nos. 2-89212, 2-99206 and 33-3800); Form S-3
Registration Statement (No. 33-27416); Quarterly Reports on Form 10-Q (for
the quarters ended September 30, 1986, March 31, 1990 and September 30,
1990); Form 8-A Registration Statement No. 0-12337; Annual Reports on Form
10-K for the years ended December 31, 1992, December 31, 1991, December 31,
1990, December 31, 1989 and December 31, 1987; Schedule 13E-4 No. 5-34444;
and Form T-3 Application for Qualification No. 22-19024 have been
incorporated by reference into Part II, Item 5 and Part IV, Item 14.

TABLE OF CONTENTS
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Page
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PART I

Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . 4
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . 22
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . 25
Item 4. Submission of Matters to a Vote of Security Holders . . 26

PART II

Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters . . . . . . . . . . . . 27
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . 29
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 30
Item 8. Financial Statements and Supplementary Data . . . . . . 45
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . 46

PART III

Item 10. Directors and Executive
Officers of the Registrant . . . . . . . . . . . . . . . 47
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . 51
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . 54
Item 13. Certain Relationships and Related Transactions . . . . . 57

PART IV

Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K . . . . . . . . . . . . . . . . 59

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

PART I

Item 1. Business.
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Overview.
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America West Airlines, Inc. ("America West" or the "Company"), a
Delaware corporation, began operations in 1983. The Company is a full-
service passenger airline which serves 43 destinations in the continental
United States and Mexico City, including its hubs in Phoenix, Arizona and
Las Vegas, Nevada and a mini-hub in Columbus, Ohio. In 1992, the Company
established a code sharing relationship with Mesa Airlines, Inc. for
commuter service, operating under the name "America West Express",
permitting the Company to serve an additional 23 destinations as of
December 31, 1993.

On June 27, 1991, America West filed a voluntary petition in the United
States Bankruptcy Court for the District of Arizona (the "Bankruptcy
Court") to reorganize under Chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Code"). The Company is currently operating as a debtor-
in-possession ("D.I.P.") under the supervision of the Bankruptcy Court.
The Company is authorized to operate its business but may not engage in
transactions outside the ordinary course of business without the approval
of the Bankruptcy Court.

Bankruptcy And Reorganization Events.
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Since June 27, 1991, the date America West filed the voluntary petition
with the Bankruptcy Court to reorganize, the Company has obtained D.I.P.
financing, reduced expenses and overhead and restructured its routes and
aircraft fleet. On February 24, 1994, America West selected an investment
proposal pursuant to which it intends to develop a plan of reorganization.

Bankruptcy Events. As a result of the Chapter 11 filing, the
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prosecution of all actions and claims against America West was
automatically stayed pursuant to Section 362 of the Bankruptcy Code.
America West promptly obtained from the Bankruptcy Court a series of Orders
("First Day Orders") authorizing America West to pay certain critical
vendors and suppliers, and also authorizing the payment of employee wages
and benefits, as necessary to ensure that America West's passenger flight
operations were not disrupted and that the Company's ongoing enterprise
value would be preserved. Approximately $55 million of what otherwise
would have been pre-petition unsecured debt was authorized by the
Bankruptcy Court to be paid pursuant to the First Day Orders.

In addition, certain stipulations between the Company and providers of
aircraft and aircraft-related equipment were negotiated and approved by the
Bankruptcy Court pursuant to Section 1110 and Section 365 of the Bankruptcy
Code. These stipulations resulted in America West receiving certain
deferrals, concessions and other payment term modifications in return for
the assumption and/or conversion of the debts arising from the agreements
to post-petition administrative expense priority status under Section 503
and Section 507 of the Bankruptcy Code. For further information on the
effect of the stipulations, and subsequent events relating thereto, see
Bankruptcy And Reorganization Events -- Route Structure and Aircraft Fleet
Reductions, below.

Subsequent to the case being filed, the United States Trustee for the
District of Arizona appointed an Official Committee of Unsecured Creditors
(the "Creditors' Committee") and an Official Committee of Equity Security
Holders (the "Equity Committee") as provided by Section 1102 of the
Bankruptcy Code. Each of these committees has certain rights and
obligations provided for by the Bankruptcy Code and other applicable law,
and have continued as active participants in the bankruptcy case since
their appointment. Each of the committees has retained professional
advisors to assist them in the bankruptcy proceedings, including attorneys
and accountants, as well as financial and industry advisors. The expenses
associated with the committees and their advisors, as allowed by the
Bankruptcy Court, must be paid by the Company as administrative expenses
pursuant to certain orders of the Bankruptcy Court providing for the
payment of professional fees and expenses. The Company anticipates that
each of the committees will continue to be actively involved in the
bankruptcy proceedings on behalf of their respective constituents,
particularly with respect to the development, negotiation and confirmation
of a plan of reorganization for the Company.

The Company anticipates that the reorganization process will result in
the restructuring, cancellation and/or replacement of the interests of its
existing common and preferred stockholders. Because of the "absolute
priority rule" of Section 1129 of the Bankruptcy Code, which requires that
the Company's creditors be paid in full (or otherwise consent) before
equity holders can receive any value under a plan of reorganization, the
Company previously disclosed that it anticipated that the reorganization
process would result in the elimination of the Company's existing equity
interests. However, due to recent events, including sustained improvement
in the Company's operating results as a result of the general improvement
in the condition of the United States' economy and airline industry, some
form of distribution to the equity interests pursuant to Section 1129 may
occur. However, there can be no assurances in this regard.

On February 24, 1994, the Company selected an investment proposal as the
basis for developing the Company's plan of reorganization, which proposal
might result in a potential distribution to the Company's current equity
holders as part of a plan of reorganization, however, there can be no
assurances in this regard. See also Bankruptcy and Reorganization Events
-- Plan of Reorganization, below.

The Company has incurred and will continue to incur significant costs
associated with the reorganization. The amount of these costs, which are
being expensed as incurred, has affected and is expected to continue to
affect the results of operations.

Debtor-in-Possession Financing. In 1991, affiliates of Guinness Peat
------------------------------
Aviation ("GPA"), Northwest Airlines, Inc. ("Northwest") and Kawasaki
Leasing International Inc. ("Kawasaki") provided $78 million of D.I.P.
financing to the Company. In September 1992, America West received an
additional $53 million in D.I.P. financing, bringing the total outstanding
D.I.P. financing at December 31, 1992, to $110.8 million which consisted of
$69.8 million from GPA, $23 million from Kawasaki, $10 million from Ansett
Worldwide Aviation Services ("Ansett") and $8 million from several Arizona-
based entities. The D.I.P. financing is collateralized by substantially
all of the Company's assets.

The financing provided by Northwest was repaid in full at the time of
the September 1992 D.I.P. financing. America West also reconstituted its
board of directors concurrent with

the September 1992 D.I.P. financing. In September 1993, the D.I.P. lenders
extended the maturity date of the D.I.P. financing from September 30, 1993
to June 30, 1994. At the time of the September 1993 extension, the
financing provided by Ansett was repaid in full.

Interest on all funds advanced under the D.I.P. facility accrues at 3.5
percent over the 90-day London Interbank Offered Rate ("LIBOR") and is
payable quarterly. Principal repayments in the amount of $5.54 million
were made on March 1993 and June 1993. As a result of the September 1993
extension of the D.I.P. financing maturity date, the Company is required to
repay $5 million of principal on March 31, 1994. The remaining outstanding
balance will be due upon the earlier of June 30, 1994, or upon the
effective date of a confirmed Chapter 11 plan of reorganization (the
"Reorganization Date"). The amended terms of the D.I.P. financing require
the Company to notify the D.I.P. lenders if the unrestricted cash balance
of the Company exceeds $125 million. Upon receipt of such notice, the
D.I.P. lenders may require the Company to prepay the D.I.P. financing by
the amount of such excess. During the first quarter of 1994, the Company
notified the D.I.P. lenders that the Company's unrestricted cash exceeded
$125 million; however, to date, the D.I.P. lenders have not exercised their
prepayment rights.

As a condition to extending the maturity date of the D.I.P. financing in
September 1993, the Company also agreed to pay a facility fee of $627,000
to the D.I.P. lenders on September 30, 1993 and to pay an additional
facility fee equal to 1/4 percent of the then outstanding balance of the
D.I.P. financing on March 31, 1994. As of December 31, 1993, the
outstanding amount due under the D.I.P. financing was approximately $83.6
million. Presently, the Company does not possess sufficient liquidity to
satisfy the D.I.P. financing nor does it appear that new equity capital
will be obtained and a plan of reorganization confirmed prior to June 30,
1994. Consequently, the Company will be required to obtain alternative
repayment terms from its current D.I.P. lenders. Although there can be no
assurance that alternative repayment terms will be obtained, the Company
believes that any required extension of the D.I.P. financing would be for a
short period of time and would be concurrent with the implementation of a
plan of reorganization.

In connection with the D.I.P. financing provided by Kawasaki, the
Company agreed to convert advanced cash credits for 24 Airbus A320 aircraft
(the "Kawasaki Aircraft") previously advanced by Kawasaki into an unsecured
priority term loan (the "Kawasaki Term Loan"). At December 31, 1993, the
amount of the Kawasaki Term Loan was $68.4 million, including accrued
interest of $21.9 million. Until the Reorganization Date, the Kawasaki
Term Loan will accrue interest at 12 percent per annum and such interest
will be added to principal. On the Reorganization Date, 85 percent of the
Kawasaki Term Loan will be converted into an eight-year term loan which
will accrue interest at 2 percent over 90-day LIBOR and will be secured by
substantially all the assets of the Company if the D.I.P. financing is
fully repaid. Principal on such loan will be due and payable in equal
quarterly installments, plus interest, commencing after the Reorganization
Date. The Company has the right to prepay the Kawasaki Term Loan if the
D.I.P. financing is fully repaid. The remaining 15 percent of the Kawasaki
Term Loan will be treated as a general unsecured claim without priority
status under the Company's plan of reorganization. In the first quarter of
1994, the Company received information that the Kawasaki Term Loan was
purchased by a third party.

Route Structure and Aircraft Fleet Reductions. Since its bankruptcy
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filing, the Company has reviewed its route structure and flight schedules
and the resulting requirements for aircraft. In September 1991, America
West reduced the size of its fleet from 123 to 101 aircraft. The Company
further reduced its fleet in September 1992 and, as of December 1993, the
Company operated 85 aircraft. In connection with such fleet reductions,
the Company renegotiated many of its aircraft lease and loan agreements.
The Company returned aircraft to those providers whose aircraft were not
consistent with the Company's revised business strategy and to those
providers who were unwilling or unable to accept the revised terms proposed
by the Company. Aircraft providers whose aircraft were returned to them
in connection with the Company's fleet reduction and restructuring efforts
may be entitled to unsecured pre-petition claims and/or administrative
claims in the bankruptcy case for damages arising from the return of the
aircraft. See Bankruptcy And Reorganization Events -- Claims, below.

In general, the Company received rent deferrals in 1991 and further rent
deferrals and rent reductions in 1992 from many of its aircraft providers.
The rent reductions in 1992 reduced the rents on the affected aircraft to
better reflect what the Company believed to be the fair market rent of the
affected aircraft at the time of the reduction. In order to induce the
lessors to accept rent reductions, the Company agreed that the rent on
certain Boeing 737-300 and 757-200 aircraft would be readjusted to the
current market rent effective August 1, 1994 and, if elected by the lessor,
would be readjusted at two other times during the remaining term of the
lease; however, such readjustments may not occur within two years of one
another. The Company also agreed in certain cases that lessors could call
the aircraft upon 180 days notice if the lessor had a better lease proposal
from another party which the Company was unwilling to match. During the
period August 1, 1994 through July 31, 1995, certain of these lessors may
call their aircraft without first giving the Company the right to match any
competing offer. Call rights with a right of first refusal affect 16
aircraft and call rights without a right of first refusal affect 10
aircraft. In addition, in order to induce several lessors to extend the
lease terms of their aircraft, the Company agreed that the aircraft could
be called by the lessors at the end of the original lease term. One lessor
of 11 aircraft has the right to terminate each lease at the end of the
original lease term of each aircraft. Such lessor also has the right to
call its aircraft on 90 days notice at any time prior to the end of the
amended lease term. America West has no right of first refusal with
respect to such aircraft. To date, no lessor has exercised its call rights.

Principal payments on certain loans secured by aircraft were deferred
for the period August 1, 1992 through January 31, 1993 and will be repaid
over the remaining terms of five to nine years. Interest payments due in
July and August 1992, on such loans were deferred until the first quarter
of 1993 and were repaid in three equal monthly installments without
interest. A more comprehensive description of the rent deferrals and
reductions as well as the loan deferrals is set forth herein in Item 7.
------
Management's Discussion and Analysis of Financial Condition and Results of
Operations and in Item 8. Financial Statements and Supplementary Data -
------
Note 1 of Notes to Financial Statements.

Claims. The reorganization process is expected to result in the
------
cancellation and/or restructuring of substantial debt obligations of the
Company. Under the Bankruptcy Code, the Company's pre-petition liabilities
are subject to settlement under a plan of reorganization. The Bankruptcy
Code also requires that all administrative claims be paid on the effective
date of a plan of reorganization unless the respective claimants agree to
different treatment. There are differences between the amounts at which
claims liabilities are recorded in the financial

statements and the amounts claimed by the Company's creditors and such
differences are material. Significant litigation may be required to
resolve any disputes.

The Bankruptcy Court set February 28, 1992, as the last date for the
filing of proofs of claim under the Bankruptcy Code and the Company's
creditors have submitted claims for liabilities not paid and for damages
incurred. Claims for administrative expenses (administrative claims) were
not required to be filed by that date.

Due to the uncertain nature of many of the potential claims, America
West is unable to project the magnitude of such claims with any degree of
certainty. However, the claims (pre-petition claims and administrative
claims) that have been filed against the Company are in excess of $2
billion. Such aggregate amount, includes claims of all character,
including, but not limited to, unsecured claims, secured claims, claims
that have been scheduled but not filed, duplicative claims, tax claims,
claims for leases that were assumed, and claims which the Company believes
to be without merit; however, claims filed for which an amount was not
stated, are not reflected in such amount. The Company is unable to
estimate the potential amount of such unstated claims; however, the amount
of such claims could be material.

The Company is in the process of reviewing the general unsecured claims
asserted against the Company. In many instances, such review process will
include the commencement of Bankruptcy Court proceedings in order to
determine the amount at which such claims should be allowed. The Company
has accrued its estimate of claims that will be allowed or the minimum
amount at which it believes the asserted general unsecured claims will be
allowed if there is no better estimate within the range of possible
outcomes. However, the ultimate amount of allowed claims will be different
and such differences could be material. The Company is unable to estimate
the amount of such difference with any reasonable degree of certainty at
this time.

The Bankruptcy Code requires that all administrative claims be paid on
the effective date of a plan of reorganization unless the respective
claimants agree to different treatment. Consequently, depending on the
ultimate amount of administrative claims allowed by the Bankruptcy Court,
the Company may be unable to obtain confirmation of a plan of
reorganization. The Company is actively negotiating with claimants to
achieve mutually acceptable dispositions of these claims. Since the
commencement of the bankruptcy proceeding, claims alleging administrative
expense priority totaling more than $153 million have been filed and an
additional claim of $14 million has been alleged. As of February 28, 1994,
$115 million of the filed claims have been allowed and settled for $50.2
million in the aggregate. The Company is currently negotiating the
resolution of the remaining $38 million filed administrative expense claim
(which relates to a rejected lease of a Boeing 737-300 aircraft) and the
$14 million alleged administrative expense claim (which relates to a
rejected lease of a Boeing 757-200 aircraft). Claims have been or may be
asserted against the Company for alleged administrative rent and/or breach
of return conditions (i.e. maintenance standards), guarantees and tax
indemnity agreements related to aircraft or engines abandoned or rejected
during the bankruptcy proceedings. Additional claims may be asserted
against the Company and allowed by the Bankruptcy Court. The amount of
such unidentified administrative claims may be material.

As part of its claims administration procedure, the Company is reviewing
potential claims that could arise as a result of the Company's rejection of
executory contracts. The Company's

plan of reorganization will provide for the status of any executory contract
not theretofore assumed by either affirming or rejecting such contracts.
The assumption or rejection of certain executory contracts could result in
additional claims against the Company.

Plan of Reorganization. Under the Bankruptcy Code, the Company's pre-
----------------------
petition liabilities are subject to settlement under a plan of
reorganization. Pursuant to an extension granted by the Bankruptcy Court
on February 2, 1994, the Company has the partially exclusive right, until
June 10, 1994 (unless extended by the Bankruptcy Court), to file a plan of
reorganization. Each of the official committees has also been approved to
submit a plan of reorganization. The exclusivity period may be extended by
the Bankruptcy Court upon a showing of cause after notice has been given
and a hearing has been held, although no assurance can be given that any
additional extensions will be granted if requested by the Company. The
Company has agreed not to seek additional extensions of the exclusivity
period without the advance consent of the Creditors' Committee and the
Equity Committee.

On December 8, 1993 and February 16, 1994, the Bankruptcy Court entered
certain orders which provided for a procedure pursuant to which interested
parties could submit proposals to participate in a plan of reorganization
for America West. The Bankruptcy Court also set February 24, 1994 as the
date for America West to select a "Lead Plan Proposal" from the proposals
submitted.

On February 24, 1994, America West selected as its Lead Plan Proposal an
investment proposal submitted by AmWest Partners, L.P., a limited
partnership ("AmWest"), which includes Air Partners II, L.P., Continental
Airlines, Inc., Mesa Airlines, Inc. and Fidelity Management Trust Company.
On March 11, 1994, the Company and AmWest entered into a revised investment
agreement which substantially incorporates the terms of the AmWest
investment proposal (the "Investment Agreement"). The Investment Agreement
provides that AmWest will purchase from America West equity securities
representing a 37.5 percent ownership interest in the Company for $120
million and $100 million in new senior unsecured debt securities. The
Investment Agreement also provides that, in addition to the 37.5 percent
ownership interest in the Company, AmWest would also obtain 72.9 percent of
the total voting interest in America West after the Company is reorganized.
The terms of the Investment Agreement will be incorporated into a plan of
reorganization to be filed with the Bankruptcy Court; however,
modifications to the Investment Agreement may occur prior to the submission
of a plan of reorganization and such modifications may be material. There
can be no assurance that a plan of reorganization based upon the Investment
Agreement will be accepted by the parties entitled to vote thereon or
confirmed by the Bankruptcy Court.

In addition to the interest in the reorganized America West that would
be acquired by AmWest pursuant to the Investment Agreement, the Investment
Agreement also provides for the following:

1. The D.I.P. financing would be repaid in full with cash on the
Reorganization Date.

value of the securities distributed to them has not provided them
with a full recovery under the Bankruptcy Code. In addition,
unsecured creditors would have the right to elect to receive cash
at $8.889 per share up to an aggregate maximum amount of $100
million, through a repurchase by AmWest of a portion of the shares
to be issued to unsecured creditors under a plan of reorganization.

3. Holders of equity interests would have the right to receive up to
10 percent of the new common equity of the Company, depending on
certain conditions principally involving a determination as to
whether the unsecured creditors had received a full recovery on
account of their claims. In addition, holders of equity interests
would have the right to purchase up to $15 million of the new
common equity in the Company for $8.296 per share from AmWest, and
would also receive warrants entitling them to purchase, together
with AmWest, up to five percent of the reorganized Company's common
stock, at a price to be set so that the warrants would have value
only after the unsecured creditors receive full recovery on their
claims.

4. In exchange for certain concessions principally arising from
cancellation of the right of GPA affiliates to put to America
West 10 Airbus A320 aircraft at fixed rates, GPA, or certain
affiliates thereof, would receive (i) 7.5 percent of the new common
equity in the reorganized Company, (ii) warrants to purchase up to
2.5 percent of the reorganized Company's common stock on the same
terms as the AmWest warrant, (iii) $3 million in new senior
unsecured debt securities, and (iv) the right to require the
Company to lease up to eight aircraft of types operated by the
Company from GPA prior to June 30, 1999 on terms which the Company
believes to be more favorable those currently applicable to the
put aircraft. For an additional discussion of the put rights,
see Item 2. Properties -- Aircraft, below.
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5. Continental Airlines, Inc., Mesa Airlines, Inc. and America West
would enter into certain alliance agreements which would include
code-sharing, schedule coordination and certain other relationships
and agreements. A condition to proceeding with a plan of
reorganization based upon the Investment Agreement would be that
these agreements be in form and substance satisfactory to America
West, including the Company's reasonable satisfaction that such
alliance agreements, when fully implemented, will result in an
increase in pre-tax income to the Company of not less than $40
million per year.

6. The expansion of the Company's board of directors to 15 members.
Nine members would be designated by AmWest and other members
reasonably acceptable to AmWest would include four members
designated by representatives of the Company, the Equity Committee
and the Creditors' Committee and two members designated by GPA.

from all currently existing obligations arising under the Company's
stock purchase plan in consideration for the cancellation of the
shares of Company stock securing such obligations.

The Company has also entered into a Revised Interim Procedures Agreement
(the "Procedures Agreement") with AmWest. The Procedures Agreement is
subject to the approval of the Bankruptcy Court and sets forth terms and
conditions upon which the Company must operate prior to the effective date
of a confirmed plan of reorganization based upon the terms of the Investment
Agreement. The Procedures Agreement provides for the reimbursement of
AmWest's expenses (up to a maximum of $3.55 million) as well as a termination
fee of up to $8 million under certain conditions. As of March 29, 1994, the
Procedures Agreement had not received Bankruptcy Court approval, but a
hearing in this regard is scheduled for April 12, 1994.

The Company is currently developing with AmWest a plan of reorganization
based upon the foregoing terms. The Equity Committee has agreed to support
the plan. The Creditors' Committee has indicated that it does not support
the current terms of the Investment Agreement. Another group interested in
developing a plan of reorganization with the Company has proposed to
invest $155 million in equity securities and $65 million in new senior
unsecured debt securities. The proponent of this proposal would receive a
33.5 percent ownership interest in the reorganized Company, current equity
holders would receive a 4.0 percent ownership interest in the reorganized
Company and the unsecured creditors would receive a 62.5 percent ownership
interest in the reorganized Company.

Any plan of reorganization must be approved by the Bankruptcy Court and
by specified majorities of each class of creditors and equity holders whose
claims are impaired by the plan. Alternatively, absent the requisite
approvals, the Company may seek Bankruptcy Court approval of its
reorganization plan under Section 1129(b) of the Bankruptcy Code, assuming
certain tests are met. The Company cannot predict whether any plan
submitted by it will be approved.

The Company is currently unable to predict when it may file a plan of
reorganization based upon the Investment Agreement, but intends to do so as
soon as practicable. Once a plan with a disclosure statement is filed by
any party, the Bankruptcy Court will hold a hearing to determine the
adequacy of the information contained in such disclosure statement. Only
upon receiving an order from the Bankruptcy Court providing that the
disclosure statement accompanying any such plan contains adequate
information as required by Section 1125 of the Bankruptcy Code, may a party
solicit acceptances or rejections of any such plan of reorganization.
Following entry of an order approving the disclosure statement, the plan
will be sent to creditors and equity holders for voting pursuant to both
the Bankruptcy Code and orders that will be entered by the Bankruptcy
Court. Following submission of the plan to holders of claims and equity
interests, the Bankruptcy Court will hold a hearing to consider
confirmation of the plan pursuant to Section 1129 of the Bankruptcy Code.
Although the Bankruptcy Code provides for certain minimum time periods for
these events, the Company is unable to reasonably estimate when a plan
based on the Investment Agreement might be submitted for voting and
confirmation.

If at any time the Creditors' Committee, the Equity Committee or any
creditor of the Company or equity holder of the Company believes that the
Company is or will not be in a

position to sustain operations, such party can move in the Bankruptcy Court
to compel a liquidation of the Company's estate by conversion to Chapter 7
bankruptcy proceedings or otherwise. In the event that the Company is forced
to sell its assets and liquidate, it is unlikely that unsecured creditors or
equity holders will receive any value for their claims or interests.

See Item 3. Legal Proceedings, Item 7. Management's Discussion and
------ ------
Analysis of Financial Condition and Results of Operations and Item 8.
------
Financial Statements and Supplementary Data - Note 1 of Notes to Financial
Statements, for additional information concerning the bankruptcy process
and its impact on the Company.

Competition.
-----------

The airline industry is highly competitive and susceptible to price
discounting. Many of America West's competitors are carriers with
substantially greater financial resources. Overall industry profit margins
have traditionally been low and in the last three years, have been
substantially negative. Airlines compete in the areas of pricing,
scheduling (frequency and flight times), on-time performance, frequent
flyer programs and the automation of travel agents' reservation systems.
Price competition results primarily from the offering of discount or
promotional fares to passengers and, in the case of freight services, from
the offering of special commodity rates to shippers. Any such fares or
rates offered by one airline are normally matched by competing airlines.

Profit levels are highly sensitive to, and during the last three years
have been adversely impacted by, changes in fuel prices, average yield
(fare levels) and passenger demands. Passenger demand and yield have been
affected by, among other things, the general state of the economy and
actions taken by America West and its competitors.

United States air carriers are free to set their own domestic fares
without government regulation. In the spring of 1992, American Airlines
introduced a new fare structure followed by a deeply discounted summer
sale, steps that were generally matched by other U.S. airlines (including
America West), resulting in substantially depressed industry yields and
significant 1992 losses at most of the major U.S. airlines. American
Airlines and the rest of the domestic airline industry subsequently
abandoned that pricing structure and fare levels have since increased in
1993 from 1992 levels. Nonetheless, significant industry-wide discounts
could be re-implemented at any time, and the introduction of broadly-
available, deeply discounted fares by a major U.S. airline would likely
result in lower yields for the entire industry and could have a material
adverse effect on the Company's operating results.

Several of the Company's major markets, including those in New York
City, Texas and Southern California, as well as Washington D.C., Chicago
and Las Vegas, are served by other larger and more established carriers and
are highly competitive. On many routes, and in particular those routes
between Phoenix and California, fare competition has made it difficult for
the Company to raise fares except on a selective basis. Intense fare
competition with respect to certain markets has adversely affected
passenger yield and as a result profitability.

In recent years several new carriers have entered the industry,
typically with low cost structures. Aircraft, skilled labor and gates at
most airports continue to be available to start-up carriers. Currently,
any air carrier deemed fit by the Department of Transportation ("DOT")

is free to operate scheduled passenger service between any two points in the
United States and its possessions. The result, since deregulation, has
been the creation of a series of new entrant airlines. New entrant air
carriers have, other than low operating costs, relatively few competitive
advantages. To capitalize on the low cost advantage, new entrant airlines
seek to attract market share through price competition. In doing so, they
keep downward pressure on industry-wide fares. America West is subject to
these pricing actions. The Company has developed competitive strategies
in an effort to insulate itself from the impact of new entrant carriers;
but, these strategies cannot be completely effective.

Operating Strategy.
------------------

America West's operating strategy as a full service carrier consists of
(i) operating with low costs; (ii) offering its passengers competitive
fares; (iii) delivering quality air travel service; and (iv) providing
these services to cities which have the greatest demand for America West's
product mix and on routes which take advantage of the Company's hub-and-
spoke system. The Company has determined that it will not develop an
overseas international route network but may form strategic alliances with
foreign or other U.S. carriers who desire traffic from, and access to,
America West's travel markets.

The Company endeavors to establish and maintain routes and fares which
will build passenger volume sufficient to permit the Company to operate
profitably. The Company has selected routes which, in management's
opinion, had not been receiving the frequency and quality of air service
which such routes are capable of supporting.

During the first quarter of 1993, the Company entered into discussions
with American Airlines regarding possible joint marketing arrangements and
management service agreements; however, during the second quarter of 1993
these discussions were terminated when it was determined that proceeding
with such arrangements would not be in the best interest of either company.

During the bankruptcy, the Company has been able to eliminate or
renegotiate certain pre-petition debt. Steps taken by the Company since
filing for bankruptcy protection in June 1991, have included: (i) various
cost reduction programs, which included a wage freeze preceded by a 10
percent wage reduction for all employees and the consolidation of the
Company's leased facilities; (ii) rejecting leases of certain aircraft and
aircraft types which were deemed surplus to the Company's strategy of
focusing on domestic markets; (iii) adjustments to certain aircraft lease
rates and interest costs to reflect current market values; (iv) realigning
its routes to improve load factors and yields and enhancing its revenue
management system; and (v) the introduction of several code sharing
agreements which has enabled the Company to expand its scope of service and
attract a broader passenger base.

In addition, if a plan of reorganization based upon the current terms of
the Investment Agreement is confirmed, the Company anticipates the
formation of an alliance among itself, Continental Airlines, Inc. and Mesa
Airlines, Inc. which could include code-sharing, schedule coordination and
certain other relationships and agreements. See Bankruptcy And
Reorganization Events -- Plan of Reorganization, above.

Operations.
----------

Hub Operations. The Company has established major hub systems in
--------------
Phoenix and Las Vegas and a mini-hub in Columbus. The success of the
Company's hub systems depends on its ability to attract passengers
traveling to and from its hubs, as well as passengers traveling through the
hubs to the Company's other destinations. The Company schedules banks of
flights timed to arrive at the hub from one direction at approximately the
same time and to depart toward the opposite direction a short time later.

During 1993, the Company enplaned approximately 40 percent of all
Phoenix enplanements and had an average of 149 daily departures. Southwest
Airlines enplaned approximately 30 percent, and no other carrier accounted
for more than six percent of enplanements. During 1993, the Company
enplaned approximately 26 percent of the Las Vegas traffic and had an
average of 74 daily departures. Southwest enplaned approximately 29
percent, and no other carrier accounted for more than 10 percent of
enplanements.

The Company began service at Columbus, Ohio in December 1991 with nine
round-trip flights per day with nonstop service to Phoenix, Las Vegas,
Boston and Washington D.C. As of February 28, 1994, the Company provided
non-stop jet service to 11 destinations from Columbus, Ohio. During 1993,
the Company enplaned approximately 18 percent of the Columbus traffic and
had an average of 33 daily departures. USAir and Delta enplaned 21 percent
and 12 percent, respectively, and no other carrier accounted for more than
10 percent of enplanements.

Regional/Commuter Service. On October 1, 1992, America West entered
-------------------------
into a code-sharing agreement with Mesa Airlines to provide the Company
with service to 13 cities from its Phoenix hub. Under the terms of this
agreement, Mesa Airlines began operating in Phoenix under the name "America
West Express". The code-sharing agreement establishes Mesa Airlines as a
feeder carrier for the Company and provides for coordinated flight
schedules, passenger handling and computer reservations under the America
West flight designator code, allowing passengers to purchase one air fare
for their entire trip. Mesa Airlines has begun to incorporate the color
scheme and commercial logo of America West on aircraft utilized on America
West Express routes. America West Express services 13 destinations from
the Company's Phoenix hub operations with an average of 49 daily
departures. Pursuant to a second code-sharing agreement entered into in
December 1993, Mesa Airlines serves nine destinations from the Company's
Columbus hub operations with an average of 33 daily departures. The code
sharing agreements with Mesa Airlines are long term, but may be cancelled
by either party for cause upon 60 days notice. In certain instances, such
as the cessation of operations, the agreement may be immediately
terminated.

Marketing.
---------

America West's marketing efforts focus on both the frequent business as
well as discretionary travellers. The Company markets its services in
large part through travel agencies. The Company has also established an
international sales network to market its product to the growing number of
international passengers passing through such international gateways served
by America West as New York City, Boston, Baltimore, Washington D.C., Los
Angeles, San Francisco and Chicago. Marketing programs such as
"FlightFund", the Company's frequent

flyer program, and those initiated by America West Vacations, the Company's
tour packaging division, have increased America West's visibility and
improved its competitive position.

Travel Agents. A large percentage of the Company's services are
-------------
marketed through travel agencies. For the twelve months ended December 31,
1993, approximately 72 percent of the Company's passenger revenues were
generated through tickets written by travel agencies.
Travel agents and other airlines are able to book passenger flights and
generate tickets on America West through computer reservation systems which
have been developed and are controlled by other airlines. At present,
approximately 98 percent of all travel agencies in the United States
utilize these systems. Federal regulations have been promulgated that are
intended to diminish preferential schedule displays and other practices
with respect to these systems which place the Company and other similarly
situated system users at a competitive disadvantage to the airlines
controlling the systems.

Frequent Flyer Program. The Company established its frequent flyer
----------------------
program, FlightFund, in 1987. FlightFund members earn mileage credits for
flights on America West and certain other participating airlines, or by
utilizing services of other program participants such as bank credit cards,
hotels and car rental firms. In addition, the Company periodically offers
special short-term promotions which allow members to earn additional free
travel awards or mileage credits. The FlightFund member accumulates
mileage credits up to 20,000 miles at which time four mileage award
certificates of 5,000 miles each are issued. Mileage award certificates
automatically expire after two years if issued prior to April 1, 1993 and
three years for issues after that date. The mileage award certificates can
be redeemed for various travel awards including first class upgrades and
tickets on America West or other airlines participating in America West's
frequent flyer program. Travel is valid up to one year from the date of
ticketing. Most travel awards are subject to blackout dates and capacity
controlled seating.

FlightFund awards may also be redeemed for flights to certain
international destinations and Hawaii. America West is required to
purchase space on other airlines to accommodate such award redemption. In
addition, America West has entered into barter agreements with certain
hotel and rental car agencies which permit the Company to award FlightFund
members with discounts at such hotels and rental agencies in exchange for
providing air travel to such hotels and travel agencies.

The Company accounts for the FlightFund program under the incremental
cost method whereby travel awards are valued at the incremental cost of
carrying one additional passenger. Costs including passenger food,
beverages, supplies, fuel, liability insurance, purchased space on other
airlines and denied boarding compensation are accrued as frequent flyer
program participants accumulate mileage to their accounts. Such unit costs
are based upon expenses expected to be incurred on a per passenger basis.
No profit or overhead margin is included in the accrual for these
incremental costs.

FlightFund's current membership is approximately 1.6 million
participants. At December 31, 1993, 1992 and 1991, the Company estimated
that approximately 238,000, 238,000 and 235,000 travel awards were expected
to be redeemed. Correspondingly, the Company has an accrued liability of
$7.4 million, $7.3 million and $6.2 million for 1993, 1992 and 1991,
respectively. The accrual is based upon the Company's estimates of mileage
earned that will eventually be redeemed for a travel award.

The number of FlightFund travel awards redeemed for round-trip travel
for the years ended December 31, 1993, 1992 and 1991, was approximately
99,000, 106,000 and 160,000 respectively, representing 2.8 percent, 3.0
percent and 3.0 percent of total revenue passenger miles for each
respective period. The Company does not believe that the usage of free
travel awards results in any significant displacement of revenue passengers
due to the Company's ability to manage frequent flyer travel by use of
blackout dates and limited seat availability.

Travel Services. America West provides services designed to appeal to
---------------
frequent business and discretionary travellers. These services include:
assigned seating; participation in travel agent automated reservation
systems; interline ticketing and baggage transfer; large overhead bins for
carry-on luggage; complimentary copies of The Wall Street Journal;
-----------------------
sandwiches and snacks on most flights of over one hour and twenty minutes;
meal service on long distance flights; and first-class seating on certain
flights. At the Phoenix hub, the Company has two airport lounges which
provide members with a number of convenient services, such as a library,
private meeting rooms, personal computers, teleconferencing, reservations,
check-in and flight information.

America West Vacations. America West Vacations, the Company's tour
----------------------
packaging division, began operations in December 1987 and generated
approximately $100 million in gross revenues during the year ended December
31, 1993. America West Vacations arranges vacation packages which include
hotel accommodations, air fare and ground transportation in certain
markets. The marketing focus of America West Vacations is currently on
Nevada, with additional programs for Arizona, Florida and California being
developed. During the year ended December 31, 1993, America West Vacations
sold approximately 500,000 room nights and over 315,000 round-trip tickets.

Advertising and Promotions. America West concentrates its advertising
--------------------------
efforts on reaching a multi-targeted audience focusing on the business and
leisure traveler as well as the travel agent community. The message is
consistent in promoting the following concepts: America West's competitive
fares; quality customer service; one of the most modern aircraft fleets in
the sky; and superior on-time performance. Media are chosen for their
effectiveness in reaching the targeted audience. The primary medium
consists of newspaper advertisements focusing on fares as a primary
message, with supplementary advertising through radio in markets where
"drive-time" opportunities are present. Travel agent publications, and
communications with individual agents transmitted via facsimile, are used
to provide the critical frequency necessary in reaching the travel agent
community with late breaking news and fare information as well as editorial
pieces focusing on preserving competition in the airline industry. In
promoting America West Vacations, a consistent use of local market
newspapers along with selected print publications is used to advertise
products. FlightFund is promoted through the use of direct mail and
America West's inflight publications.

The arena that serves as the home of the Phoenix Suns professional
basketball team is named the "America West Arena". The Company pays an
annual fee as part of its advertising budget to maintain its association
with the arena and to have its name and logo appear throughout the
facility, including on the basketball court. Because of this association,
the Company receives media exposure at no additional expense during
national and local telecasts of the Phoenix Suns basketball games, as well
as during other events.

In 1993, America West became the preferred commercial air carrier of the
MGM Grand Hotel Casino and Theme Park ("MGM") in Las Vegas, Nevada.
Pursuant to an agreement with the MGM, America West will develop joint
marketing programs with the MGM focused on travel agents and consumers.
The association with MGM will provide America West with benefits not
available to other air carriers which management believes will enhance
America West's presence in the Las Vegas.

Employees.
---------

At December 31, 1993, the Company employed 8,102 full-time and 3,117
part-time employees, the equivalent of 10,544 full-time employees. During
1993, the Company had 1,630,400 available seat miles per full-time
equivalent employee and 1,064,200 revenue passenger miles per full-time
equivalent employee, based on the number of full-time equivalents at year
end. The Company's payroll and related costs, which amounted to 1.78 cents
per ASM for the year ended December 31, 1993, is below the industry
average.

Prior to the bankruptcy filing, employees of the Company participated in
stock option and stock purchase programs. Grants under the stock option
programs were suspended after the Company's Bankruptcy filing.
Participation in the Company stock purchase program was mandatory for most
of the Company's employees. Employees were also entitled to make voluntary
purchases under the program. In general, the stock purchase program
permitted employees to purchase Common Stock of the Company at 85 percent
of the fair market value of the Common Stock. Such purchases could be
financed by the employees through the Company and such financed amounts
were repaid through payroll deductions. Since the bankruptcy filing, the
Company has suspended the stock purchase program as well as all payroll
deductions for the financed purchases. As of December 31, 1993, the
aggregate principal balance of the full recourse promissory notes issued by
employees to the Company in accordance with the Company's stock purchase
plan was $17.6 million. The Investment Agreement provides for the release
of the Company's employees from all currently existing obligations arising
under the Company's stock purchase plan in consideration for the
cancellation of the shares of Company stock securing such obligations.

Such release may result in adverse tax implications for the affected
employees. See Item 8. Financial Statements and Supplementary Data -- Notes
------
6 and 9 of Notes to Financial Statements.

In February 1991, the Company reduced the wages of its officers and
other management personnel by as much as 25 percent. In August 1991, a
Company-wide 10 percent pay reduction was implemented and the wages of all
the Company's employees have been frozen since that time. In the second
quarter of 1993, the Company instituted a transition pay program which is
intended to restore a portion of the wage reduction to employees who
continue to be employed by the Company. The transition pay program is
scheduled to terminate after four quarters, unless terminated earlier as a
result of a confirmed plan of reorganization. On March 24, 1994, the
Company announced pay increases for all employees effective April 1, 1994.
See also Item 7. Management's Discussion and Analysis of Financial
------
Condition and Results of Operations for additional information concerning
the transition pay program.

The Association of Flight Attendants (AFA) is seeking certification as
the bargaining representative of America West's Inflight Customer Service
Representatives. On January 12, 1990, the National Mediation Board (NMB)
ordered a re-run election of an election originally

held in February 1989. The re-run election was delayed several years
pending resolution of a legal dispute. On July 7, 1993, the NMB informed
America West of its intent to resume its efforts to conduct a re-run
election. A date for the election has not yet been scheduled.

On October 26, 1993, the Air Line Pilots Association (ALPA) was certified
by the NMB as the bargaining representative of America West's pilots.
Negotiations with ALPA have not yet commenced, and no opening
proposals have been exchanged. Currently, none of the Company's other
employees are represented by a union or covered by a collective bargaining
agreement. The Company believes its relations with its employees are
satisfactory.

The Company provides benefits to all employees, such as vacations and
life, health and accident insurance. Employees may also participate in the
Company's 401(k) plan. In addition, the Company provides child care
services to its employees in Phoenix, Las Vegas and other locations.
America West has no post-employment or post-retirement benefit plans.

Airport Fees.
------------

In recent years, many airports have increased or sought to increase the
rates charged to airlines. The extent to which such charges are limited by
statute and the ability of airlines to contest such charges has been and
may continue to be subject to litigation. To the extent the limitations on
such charges are relaxed or the ability of airlines is restricted, the
rates charged by airports to airlines may increase substantially.
Management cannot predict the magnitude of any such increase.

Fuel.
----

One of America West's largest expenses is jet fuel, representing 13.8
percent of total operating expense during 1993. Since the resolution of
the Middle East crisis at the end the first quarter of 1991, fuel prices
have stabilized. However, substantial increases in fuel prices or the lack
of adequate supplies in the future will have a material adverse effect on
the operations of the Company. A one cent per gallon change in fuel price
would affect the Company's annual operating results by approximately $3
million at present consumption levels.

The Company purchases fuel on standard trade terms under master
agreements and has been able to obtain fuel sufficient to meet its
requirements at competitive prices. The Company does not hedge its fuel
costs. In August 1993, the United States government increased taxes on
fuel, including aircraft fuel, by 4.3 cents per gallon. Airlines are
exempt from this tax increase until October 1, 1995. When implemented,
this new tax will increase the Company's annual operating expenses by
approximately $13 million based upon its 1993 fuel consumption levels.

Aircraft Maintenance and Repairs.
--------------------------------

Technical Support Facility. The Company has a 660,000 square foot
--------------------------
Technical Support Facility at Phoenix Sky Harbor International Airport.
The facility includes four hangar bays, engine support service shops, an
aircraft paint bay, an upholstery shop, sheet metal shop and two flight
simulator bays. The facility provides the Company with increased
flexibility in its scheduling of aircraft maintenance and reduces the
Company's vulnerability to work stoppages and labor problems encountered at
the outside facilities. Substantially all required airframe

overhauls are performed at this facility based on the Company's Federal
Aviation Administration (the "FAA") approved phased maintenance programs.
Periodic overhauls of aircraft engines are performed by outside contractors,
and it is anticipated that such will continue to be the case. The Company
provides airframe maintenance and ground services to other air carriers on
a contract basis.

The Company's aircraft are maintained in accordance with FAA-approved
maintenance programs designed for each specific aircraft type. The
maintenance programs also require that each aircraft undergo a complete
inspection using non-destructive diagnostic equipment following the
completion of specified time periods and periodically go through complete
overhauls. The purpose of this detailed inspection is to detect and repair
any structural irregularities. Maintenance efforts are monitored by the
FAA, with FAA representatives operating on-site. The Company may amend its
maintenance programs in order to comply with future directives of the
government or the manufacturer.

The Company employs approximately 1,000 maintenance and support
personnel for the maintenance and repair of the Company's aircraft.

Pilot Training Facilities.
-------------------------

FAA regulations require initial and recurrent training for pilots. The
Company currently owns one Airbus A320 simulator, one Boeing 737-300/400
simulator and one Boeing 737-200 simulator. In addition, the Company
leases one Boeing 757-200 simulator and one Boeing 737-200 simulator. The
Boeing 757-200 simulator can also be used to train pilots for Boeing 767
aircraft. The Airbus A320 simulator and the Boeing 737-300/400 simulator
were certified by the FAA in 1993. All the simulators support the
Company's pilot training programs. America West also provides similar
training on a contract basis to FAA inspectors and several other air
carriers. The Company fully utilizes these flight simulators, operating
each one approximately twenty hours a day.

Government Regulation.
---------------------

General. The Company is subject to the Federal Aviation Act of 1958
-------
(the "Aviation Act"), as amended, under which the DOT and the FAA exercise
regulatory authority. This regulatory authority includes: the
determination and periodic review of the fitness (including financial
fitness) of air carriers; the certification and regulation of the flight
equipment; the approval of personnel who may engage in flight, maintenance
and operations activities; the approval of flight training activities; and
the enforcement of minimum air safety standards set forth in FAA
regulations. In accordance with the Airline Deregulation Act of 1978,
domestic airline fares and routes are no longer subject to significant
regulation. The DOT maintains authority over international aviation,
subject to the review of the President of the United States, and has
jurisdiction over consumer protection policies, computer reservation system
issues and unfair trade practices.

Noise Abatement. The Airport Noise and Capacity Act of 1990 provides,
---------------
with certain exceptions, that after December 31, 1999, no person may
operate certain large civilian turbo-jet aircraft in the United States that
do not comply with Stage 3 noise levels (Stage 3 is the FAA designation for
the quietest commercial jets). As of December 31, 1993, 73 percent of America

West's fleet was in compliance with these FAA noise abatement regulations
that will require carriers to gradually phase out their noisier jets
(such as the Boeing 737-200), either replacing them with quieter Stage
3 jets or equipping them with hush kits to comply with noise abatement
regulations. The implementation of the regulations are on the following
schedule: by December 31, 1994, each carrier must either reduce the number
of Stage 2 aircraft it operates by 25 percent or operate a fleet composed
of not less than 55 percent Stage 3 aircraft; by December 31, 1996, each
carrier must either reduce its Stage 2 aircraft by 50 percent or operate a
fleet composed of not less than 65 percent Stage 3 aircraft; by December
31, 1998 at least 75 percent of a carrier's Stage 2 aircraft must be
eliminated, or its overall fleet must be composed of 75 percent Stage 3
aircraft; and by December 31, 1999, 100 percent of the fleet must be
composed of Stage 3 aircraft, unless certain waivers are received.

Numerous airports, including those serving Boston, Denver, Los Angeles,
Minneapolis-St. Paul, New York City, San Diego, San Francisco, San Jose,
Orange County, New York, Washington D.C, Burbank and Long Beach have
imposed restrictions such as curfew, aircraft noise levels, mandatory
flight paths and runway restrictions, which limit the ability of air
carriers to increase service at such airports. The Port Authority of New
York and New Jersey is considering a phaseout of Stage 2 aircraft on a more
accelerated basis than that of the FAA requirement. The Company's Boeing
757-200s, 737-300s and Airbus A320s all comply with current FAA Stage 3
noise regulations, as well as the more stringent noise abatement
requirements of the airports listed above.

PFC Charges. During 1990, Congress enacted legislation to permit
-----------
airport authorities, with prior approval from the DOT, to impose passenger
facility charges ("PFCs") as a means of funding local airport projects.
These charges, which are intended to be collected by the airlines from
their passengers, are limited to $3.00 per enplanement, and to no more than
$12.00 per round trip. The legislation provides that the airlines will be
reimbursed for the cost of collecting these charges and remitting the funds
to the airport authorities. America West currently retains 12 cents
(reduced to eight cents in June 1994) from every PFC that it collects,
which in 1993, resulted in $630,000 in collection reimbursements. PFCs are
currently authorized at approximately 170 airports, with a total annual
estimated industry collection of about $1 billion. The airports serving
Phoenix, Boston, Baltimore, Washington, Newark, New York City, Las Vegas,
Columbus, Orlando and Tampa (which are markets served by the Company), have
imposed or announced their intention to impose PFCs. By the end of 1994,
the Company expects that most major airports will have imposed, or
announced their intent to impose PFCs. As a result of competitive
pressure, the Company and other airlines have been limited in their
abilities to pass on the cost of the PFCs to passengers through fare
increases.

Environmental Matters. The Company is subject to regulation under major
---------------------
environmental laws administered by state and federal agencies, including
the Clean Air Act, Clean Water Act and Comprehensive Environmental Response
Compensation and Liability Act of 1980. In some locations there are also
county and sanitary sewer district agencies which regulate the Company.
The Company has not been named as a potentially responsible party by the
Environmental Protection Agency.

Aging Aircraft Maintenance. The FAA issued several Airworthiness
--------------------------
Directives ("AD") in 1990 mandating changes to the older aircraft
maintenance programs. These ADs were issued to ensure that the oldest
portion of the nation's fleet remains airworthy. The FAA is requiring

that these aircraft undergo extensive structural modifications. These
modifications are required upon the accumulation of 20 years time in
service, prior to the accumulation of a designated number of flight cycles
or prior to 1994 deadlines established by the various ADs, whichever occurs
later. Six of the Company's 85 aircraft are currently affected by
these aging aircraft ADs. The Company constantly monitors it fleet of
aircraft to ensure safety levels which meet or exceed those mandated by the
FAA or the DOT.

Safety. America West is subject to the jurisdiction of the FAA with
------
respect to aircraft maintenance and operations, including equipment,
dispatch, communications, training, flight personnel and other matters
affecting air safety. The FAA has the authority to issue new or additional
regulations. To ensure compliance with its regulations, the FAA requires
the Company to obtain operating, airworthiness and other certificates which
are subject to suspension or revocation for cause. In addition, a
combination of FAA and Occupational and Health Administration regulations
on both federal and state levels apply to all of America West's ground-
based operations.

Slot Restrictions. At New York City's JFK and LaGuardia Airports,
-----------------
Chicago's O'Hare International Airport and Washington's National Airport,
which have been designated "High Density Airports" by the FAA, there are
restrictions on the number of aircraft that may land and take-off during
peak hours. In the future, these take-off and landing time slot
restrictions and other restrictions on the use of various airports and
their facilities may result in further curtailment of services by, and
increased operating costs for, individual airlines, including America West,
particularly in light of the increase in the number of airlines operating
at such airports. In general, the FAA rules relating to allocated slots at
the High Density Airports contain provisions requiring the relinquishment
of slots for nonuse and permits carriers, under certain circumstances, to
sell, lease or trade their slots to other carriers.

On January 1, 1993, the FAA implemented new slot use standards that
require that all slots must be used on 80 percent of the dates during each
two-month reporting period. Previously, slots were required to be used at
a 65 percent use rate. Failure to satisfy the 80 percent use rate will
result in loss of the slot. The slot would revert to the FAA and be
reassigned through a lottery arrangement.

The Company currently utilizes two slots at New York City's JFK airport,
four slots at New York City's LaGuardia airport, four slots Chicago's
O'Hare airport and six slots at Washington's National airport. Four of the
slots at Washington's National airport are temporary and the Company's
right to utilize such slots expires in September 1994; however, the Company
currently expects that its ability to utilize such slots will be renewed.
The average utilization rate by the Company of all the foregoing slots
range from 86 percent to 100 percent.

CRAF Program. In time of war or during a national emergency or civil
------------
defense emergency declared by the President or the Congress of the United
States, or in a situation short of this declared by the Director of the
Office of Emergency Preparedness, the Commander in Chief, Military Airlift
Command, or any official designated by the President to coordinate all
civil and defense mobilization activities, United States air carriers may
be required to provide airlift services to the Military Air Command under
the Civil Reserve Air Fleet Program (the "CRAF Program"). During the
Middle East conflict, two of America West's aircraft participated in the
CRAF Program.

Insurance.
---------

The Company has arranged a program of insurance of the types and in the
amounts it believes customary in the airline industry, including coverage
for public liability, passenger liability, property damage, aircraft loss
or damage, cargo liability and workers' compensation. The Company believes
such insurance is adequate as to both risks covered and coverage amounts.

Item 2. Properties.
------ ----------

Facilities.
----------

In February 1988, the Company opened its maintenance and technical
support facility at Phoenix Sky Harbor International Airport. The 660,000
square foot facility is comprised of four hangar bays, hangar shops, a
flight simulator building as well as warehouse and commissary facilities.

The Company owns the 68,000 square foot America West Corporate Center at
222 South Mill Avenue in Tempe, Arizona. At December 31, 1993, the Company
leased approximately 650,000 square feet of general office and other space
in Phoenix and Tempe, Arizona. As a result of the reduction in aircraft
fleet size in 1991 and 1992, a portion of the leased space became surplus
to the Company's operational requirements. Negotiations with lessors
occurred during 1993 with the assistance of a consulting firm in an effort
to develop a consolidation plan. Such plan was completed at the end of
1993 and its implementation commenced in the first quarter of 1994. The
consolidation plan generally provides for a reduction in leased space by
approximately 150,000 square feet.

In 1990, the Company's Phoenix passenger service facilities were
relocated to Terminal 4 of Phoenix Sky Harbor International Airport, where
the Company leases approximately 258,200 square feet at December 31, 1993.
The Company presently has 28 gates with 27 of such gates having enclosed
passenger loading bridges at its two concourse facilities located in
Terminal 4. The Company also leases approximately 25,000 square feet of
other space at the airport for administrative offices and pilot training.

At December 31, 1993, the Company leased approximately 106,000 square
feet of space at McCarran International Airport in Las Vegas, Nevada.
Included in this property at Terminal B are 13 gates (all equipped with
enclosed passenger boarding bridges) and adjoining holding room areas. In
February 1993, the Company vacated approximately 26,000 square feet at
Terminal B, including six gates.

At the Company's Columbus, Ohio mini-hub, the Company leased
approximately 30,000 square feet of space at December 31, 1993. The
Company also leased two gates from the Columbus airport authority and has
the ability to sublease additional gates from other airlines as the need
arises.

Space for ticket counters, gates and back offices has also been obtained
at each of the other airports served by the Company, either by lease from
the airport operator or by sublease

from another airline. Some of the Company's airport sublease agreements
include requirements that the Company purchase various ground services
at the airport from the lessor airline at rates in excess of what it would
cost the Company to provide those services itself.

Aircraft.
--------

At December 31, 1993, the Company's 85 aircraft fleet consisted of three
types of aircraft (56 Boeing 737s, 18 Airbus A320s and 11 Boeing 757s).
America West's fleet has an average aircraft age of 8.1 years.

The table below sets forth certain information regarding the Company's
aircraft fleet at December 31, 1993:

Average
Aircraft Number of Average Remaining Lease
Type Status Aircraft Age (Yrs.) Term (Yrs.)
-------- ------ -------- ---------- -----------------

A320 Leased 18 3.9 16.6

737-100 Owned 1 24.3 --

737-200 Owned 5 14.8 --

737-200 Leased 17 14.0 5.9

737-300 Owned 11 5.2 --

737-300 Leased 22 6.6 8.8

757-200 Owned 2 4.3 --

757-200 Leased 9 7.8 11.0
--
Total 85 8.1
==

Each of the aircraft that is designated as owned serves as collateral
for a loan pursuant to which the aircraft was acquired by the Company or
serves as collateral for a non-purchase money loan.

At December 31, 1993, the Company had on order a total of 93 aircraft of
the types currently comprising the Company's fleet, of which 51 are firm
and 42 are options. The table below details such deliveries.

Firm Orders
------------------------------------------
Option
1994 1995 1996 1997 Thereafter Total Orders Total
---- ---- ---- ---- ---------- ----- ------ -----

Boeing: 737-300 - - 4 2 - 6 10 16

757-200 - 4 3 - - 7 10 17

Airbus: A320-200 9 5 2 8 14 38 22 60
-- -- -- -- -- -- -- --

Total: 9 9 9 10 14 51 42 93
== == == == == == == ==

The current estimated aggregate cost for these firm commitments and
options is approximately $5.2 billion. Future aircraft deliveries are
planned in some instances for incremental additions to the Company's
existing aircraft fleet and in other instances as replacements for aircraft
with lease terminations occurring during this period. The purchase
agreement to acquire 24 Boeing 737-300 aircraft had been affirmed in the
Company's bankruptcy proceeding. With timely notice to the manufacturer,
all or some of these deliveries may be converted to Boeing 737-400
aircraft. As of December 31, 1993, eight Boeing 737 delivery positions had
been eliminated due to the lack of a required reconfirmation notice by the
Company to Boeing resulting in the 16 Boeing 737-300 aircraft total
reflected in the table above. The failure to reconfirm these delivery
positions exposes the Company to loss of pre-delivery deposits and other
claims which may be asserted by Boeing in the Bankruptcy proceeding. The
purchase agreements for the remaining aircraft types have not been assumed
and, the Company has not yet determined which of the other aircraft
purchase agreements, if any, will be affirmed or rejected.

As part of the Kawasaki Term Loan, the Company terminated an agreement
to lease 24 Airbus A320 aircraft from Kawasaki, and ultimately replaced it
with a put agreement to lease up to four such aircraft. Kawasaki is under
no obligation to lease such aircraft to the Company and has the right to
remarket these aircraft to other parties. Prior to its bankruptcy filing,
the Company also entered into a similar arrangement with GPA, whereby the
Company terminated its agreement to lease 10 Airbus A320 aircraft from GPA
and replaced it with a put agreement to lease up to 10 Airbus A320 aircraft
from GPA.

The put agreement with Kawasaki requires Kawasaki to notify the Company
prior to July 1, 1994 if it intends to require the Company to lease any of
its put aircraft. GPA's put agreement requires 180 days prior notice of
the delivery of a put aircraft. The agreement also provides that GPA may
not put more than five aircraft to the Company in any one calendar year.
No more than nine put aircraft (GPA and Kawasaki combined) may be put to
the Company in one calendar year. GPA's put right expires on December 31,
1996. The Kawasaki and the GPA put aircraft are reflected in the "Firm
Order" section of the table above.

The Investment Agreement provides that as partial consideration for the
cancellation of the GPA put rights, GPA will receive the right to require
the Company to lease up to eight aircraft of types operated by the Company
from GPA prior to June 30, 1999. See Item 1. Business -- Bankruptcy And
------
Reorganization Events -- Plan of Reorganization.

The Company does not have firm lease or debt financing commitments with
respect to the future scheduled aircraft deliveries (other than for the
Kawasaki put aircraft and the GPA put aircraft referred to above).

In addition to the aircraft set forth in the chart above, the Company
also has a pre-petition executory contract under which the Company holds
delivery positions for four Boeing 747-400 aircraft under firm orders and
another four under options. The contract allows the Company, with the
giving of adequate notice, to substitute other Boeing aircraft types for
the Boeing 747-400 in these delivery positions. As a result, the Company
is still evaluating its future fleet needs and is currently unable to
determine if it will substitute other aircraft types or reject this
agreement.

Over the next four years, leases are scheduled to terminate on eight
aircraft (six Boeing 737-200s and two Boeing 757-200s). In addition,
leases for two Airbus A320-200s are scheduled to terminate during 1994;
however, the Company has extended one lease for an additional twelve
months. The other Airbus A320 aircraft will be returned to the lessor at
the end of the lease term during 1994 and will be replaced by a Boeing 757
aircraft which has been leased for a term of three years. In addition,
certain of the aircraft lessors have the right to call their respective
aircraft upon (in most cases) 180 days prior notice to the Company. The
Company, in turn (with some exceptions), may retain such aircraft via a
right of first refusal by agreeing to the bona fide terms offered by a
third party interested in leasing or purchasing the aircraft. See also
Item 1. Business -- Bankruptcy And Reorganization Events -- Route Structure
------
and Fleet Reductions.

Item 3. Legal Proceedings.
------ -----------------

On June 27, 1991, the Company filed a voluntary petition in the United
States Bankruptcy Court for the District of Arizona to reorganize under
Chapter 11 of Title 11 of the United States Bankruptcy Code. Since the
Bankruptcy filing, several entities have filed administrative claims
requesting that the Bankruptcy Court order the Company to reimburse or
compensate such entities for goods, taxes and services they allege that the
Company has received or collected, but for which they claim the Company has
not paid. Entities which have or may file administrative claims, include
aircraft maintenance organizations, municipal airports and certain
financial or governmental institutions. In addition, aircraft providers
whose aircraft were returned to them in connection with the Company's fleet
reduction and restructuring efforts in September 1991 and September 1992
may be entitled to general unsecured pre-petition claims and/or
administrative claims in the Bankruptcy case for damages arising from the
return of the aircraft. See also Item 1. Business -- Bankruptcy And
------
Reorganization Events.

In August 1991, the Securities and Exchange Commission ("SEC") informally
requested that the Company provide the SEC with certain information and
documentation underlying disclosures made by the Company in annual and
quarterly reports filed with the SEC by the Company in 1991. The Company
has cooperated with the SEC's informal inquiry. On March 29, 1994, the
Company's Board of Directors approved the submission of an offer of
settlement for the purpose of resolving the inquiry through the entry of a
consent decree pursuant to which the Company would, while neither admitting
nor denying any violation of the securities laws, agree to comply with its
future reporting obligations under Section 13 of the Securities Exchange
Act of 1934. The SEC has not yet acted on the Company's offer of settlement
and

there can be no assurance that such offer of settlement will be accepted
by the SEC. If the settlement is not accepted by the SEC, the offer will
be of no force and effect.

Item 4. Submission of Matters to a Vote of Security Holders.
------ ---------------------------------------------------

No matter was submitted to a vote of the stockholders during the fourth
quarter of the fiscal year ended December 31, 1993, through the
solicitation of proxies or otherwise.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder
------ -------------------------------------------------------------
Matters.
-------

The Company's Common Stock has been publicly traded since February 25,
1983 and is currently listed on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") under the symbol AWAQC. The
Common Stock has also been listed on the Pacific Stock Exchange since
December 20, 1988 under the symbol AWA. From February 14, 1984 to January
17, 1992, the Common Stock was listed on NASDAQ/National Market System
("NASDAQ/NMS"). Due to the bankruptcy filing and the Company's inability
to satisfy certain NASDAQ/NMS listing requirements, the Common Stock
listing was moved from NASDAQ/NMS to NASDAQ on January 20, 1992. The
following table sets forth the high and low bid quotations for the years
1992 and 1993 as reported by NASDAQ.

Common Stock
------------
High Low
---- ---

1992

First Quarter 2-5/8 1/8

Second Quarter 17/32 1/4

Third Quarter 15/16 5/16

Fourth Quarter 15/32 3/16

1993

First Quarter 17/32 3/16

Second Quarter 7/8 7/16

Third Quarter 31/32 13/32

Fourth Quarter 1-25/32 25/32

The number of record holders of the Company's Common Stock at
December 31, 1993 was approximately 18,728.

Cash dividends have never been paid on the Company's Common Stock.
Various credit agreements between the Company and its lenders restrict the
ability of the Company to pay cash dividends.

In April 1986, the Company redeemed all outstanding shares of its
Series A Preferred Stock. In September 1993, the holder of all the
Company's Series B Preferred Stock converted such stock into 1,164,596
shares of Common Stock. The Company's Series C Preferred Stock is the
only remaining outstanding class of preferred stock of the Company. A
discussion of the Company's Preferred Stock is contained on pages 14
through 16 of the Company's Form S-3 Registration Statement No. 33-27416,
incorporated herein by this reference. There is no public trading market
for the Preferred Stock.

The Company filed a motion with the Bankruptcy Court on February 10,
1994 to prohibit the sale or other transfers of any general unsecured
claims, the convertible subordinated debentures or shares of any class of
stock. The motion attempted to preserve the Company's tax assets as such
sales and transfers in sufficient numbers and amounts could, under current
tax law, jeopardize the preservation of the Company's net operating loss
and general business tax credit carryforwards. At the request of the
official committees, the Company withdrew its motion without prejudice on
February 16, 1994. On March 11, 1994, the Company again filed a motion
with the Bankruptcy Court to prohibit the sale or other transfer of shares
of any class of the Company's stock to or from five percent or more
shareholders. This motion is more limited in scope than the motion filed
on February 10, 1994 in that it seeks only to restrict transfers of stock
which could have an adverse effect on the Company's ability to fully
utilize its NOL carryforwards. On March 15, 1994, the Bankruptcy Court
ordered that this motion be converted to an adversary proceeding under the
Bankruptcy rules. As of March 29, 1994, no hearing on such proceeding has
been held. There can be no assurance that the Company will continue to
pursue this matter and, if the Company continues to pursue this matter,
that it will be successful. See Item 7. Management's Discussion and
------
Analysis of Financial Condition and Results of Operations -- Overview and
Item 8. Financial Statements and Supplementary Data -- Note 5 of Notes to
------
Financial Statements.

Item 6. Selected Financial Data.
------ -----------------------

SELECTED FINANCIAL DATA

(In thousands except per share amounts and ratio
of earnings to fixed charges)

The information set forth below should be read in conjunction with the
Financial Statements and related Notes to Financial Statements included
elsewhere herein.

Years Ended December 31,
----------------------------------------------------------------
Statements of Operations Date: 1993 1992 1991 1990 1989
---------- ---------- ---------- --------- ---------

Operating Revenues $1,325,364 $1,294,140 $1,413,925 $1,315,804 $993,409

Operating Expenses 1,204,310 1,368,952 1,518,582 1,347,435 945,293

Operating Income (Loss) 121,054 (74,812) (104,657) (31,631) 48,116

Income (Loss) Before Income
Taxes and Extraordinary
Items 37,924 (131,761) (222,016) (76,695) 20,040

Income Taxes 759 -- -- -- 7,237

Income (Loss) Before
Extraordinary Items 37,165 (131,761) (222,016) (76,695) 12,803

Extraordinary Items (a) -- -- -- 2,024 7,215

Net Income (Loss) 37,165 (131,761) (222,016) (74,671) 20,018

Income (Loss) Per Common Share:
Before Extraordinary Items 1.50 (5.58) (10.39) (4.26) 0.61

Extraordinary Items (a) -- -- -- 0.11 0.39

Net Income (Loss) 1.50 (5.58) (10.39) (4.15) 1.00

Ratio of Earnings to Fixed
Charges (b) 1.28 -- -- -- 1.12

Weighted Average Number of Common
Shares Outstanding 27,525 23,914 21,534 18,396 20,626

Years Ended December 31,
-----------------------------------------------------------------
Balance Sheet Data: 1993 1992 1991 1990 1989
---------- ---------- ---------- --------- --------

Working Capital Deficiency $ (124,375) $ (201,567) $ (51,158) $ (94,671) $(18,884)

Total Assets 1,016,743 1,036,441 1,111,144 1,165,256 835,885

Long-Term Debt and Capital
Lease Obligations, Less
Current Maturities 620,992 647,015 726,514 620,701 474,908

Total Stockholders' Equity
(Deficiency) (254,262) (294,613) (166,510) 21,141 87,203

-----------------------

(a) Includes extraordinary items of $2,024,000 in 1990 resulting from
the purchase and retirement of convertible subordinated debentures
and, in 1989, income tax benefits resulting from the utilization of
net operating loss carryforwards amounting to $7,215,000.

(b) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of income (loss) before taxes and extraordinary
items plus fixed charges less capitalized interest. "Fixed charges"
consist of interest expense including amortization of debt expense,
capitalized interest and one-third of rent expense which is deemed
to be representative of an interest factor. For the years ended
December 31, 1992, 1991, and 1990, earnings were insufficient to
cover fixed charges by $131,761,000, $228,680,000 and $83,070,000,
respectively.

Item 7. Management's Discussion and Analysis of Financial Condition and
------ ---------------------------------------------------------------
Results of Operations.
---------------------

Overview
--------

On June 27, 1991 the Company filed a voluntary petition in the United
States Bankruptcy Court for the District of Arizona (the "Bankruptcy
Court") to reorganize under Chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Code"). The Company is currently operating as a debtor-
in-possession ("D.I.P.") under the supervision of the Bankruptcy Court. As
a debtor-in-possession, the Company is authorized to operate its business
but may not engage in transactions outside its ordinary course of business
without approval of the Bankruptcy Court.

The accompanying financial statements have been prepared on a going
concern basis which assumes continuity of operations and realization of
assets and liquidation of liabilities in the ordinary course of business.
As a result of the reorganization proceedings, there are uncertainties
relating to the ability of the Company to continue as a going concern. The
financial statements do not include any adjustments that might be necessary
as a result of the outcome of the uncertainties discussed herein including
the effects of any plan of reorganization.

Due to the bankruptcy proceedings, current economic conditions and the
competitive nature of the airline industry, no measure of comparability can
be drawn from past results in order to measure those that may occur in the
future. Among the uncertainties which might adversely impact the Company's
future operations are: economic recession; changes in the cost of fuel,
labor, capital and other operating items; increased level of competition
resulting in significant discounting of fares; changes in capacity, load
factors and yields; or reduced levels of passenger traffic due to war or
terrorist activities.

In addition, the following significant bankruptcy related events
occurred during 1993.

D.I.P. Loan. The Bankruptcy Court approved an amendment to the D.I.P.
-----------
loan agreement extending the maturity date of the loan from September
30, 1993 to June 30, 1994. Concurrent with the extension of the
maturity date, $8.3 million of the principal balance was repaid to one
of the participants who did not agree to the amendment. The amended
D.I.P. loan agreement requires the payment of a facility fee of $627,000
and defers all principal payments to June 30, 1994 with the exception of
$5 million that will be due on March 31, 1994. An additional facility
fee equal to 1/4 percent of the then outstanding D.I.P. loan is required
to be paid on March 31, 1994.

The amended terms of the D.I.P. financing require the Company to notify
the D.I.P. lenders if the unrestricted cash balance of the Company
exceeds $125 million. Upon receipt of such notice, the D.I.P. lenders
may require the Company to prepay the D.I.P. financing by the amount of
such excess. During the first quarter of 1994, the Company notified the
D.I.P. lenders that the Company's unrestricted cash exceeded $125
million; however, to date, the D.I.P. lenders have not exercised their
prepayment rights. See Item 8. Financial Statements and Supplementary
------
Data -- Note 4 of Notes to Financial Statements.

Plan Proposals. On December 8, 1993 and February 16, 1994, the
--------------
Bankruptcy Court entered certain orders which provided for a procedure
pursuant to which interested parties could submit proposals to
participate in a plan of reorganization for America West. The
Bankruptcy Court also set February 24, 1994 as the date for America West
to select a "Lead Plan Proposal" from among the proposals submitted.

On February 24, 1994, America West selected as its Lead Plan Proposal an
investment proposal submitted by AmWest Partners, L.P., a limited
partnership ("AmWest"), which includes Air Partners II, L.P.,
Continental Airlines, Inc., Mesa Airlines, Inc. and Fidelity Management
Trust Company. On March 11, 1994, the Company and AmWest entered into
a revised investment agreement which substantially incorporates the
terms of the AmWest investment proposal (the "Investment Agreement").
The Investment Agreement provides that AmWest will purchase from America
West equity securities representing a 37.5 percent ownership interest in
the Company for $120 million and $100 million in new senior unsecured
debt securities. The Investment Agreement also provides that, in
addition to the 37.5 percent ownership interest in the Company, AmWest
would also obtain 72.9 percent of the total voting interest in America
West after the Company is reorganized. The terms of the Investment
Agreement will be incorporated into a plan of reorganization to be filed
with the Bankruptcy Court; however, modifications to the Investment
Agreement may occur prior to the submission of a plan of reorganization
and such modifications may be material. There can be no assurance that
a plan of reorganization based upon the Investment Agreement will be
accepted by the parties entitled to vote thereon or confirmed by the
Bankruptcy Court.

In addition to the interest in the reorganized America West that would
be acquired by AmWest pursuant to the Investment Agreement, the
Investment Agreement also provides for the following:

1. The D.I.P. financing would be repaid in full with cash on the
date a plan of reorganization is confirmed ("Reorganization Date").

2. On the Reorganization Date, unsecured creditors would receive 45
percent of the new common equity in the reorganized Company, with
the potential to receive up to 55 percent of such equity if within
one year after the Reorganization Date, the value of the securities
distributed to them has not provided them with a full recovery
under the Bankruptcy Code. In addition, unsecured creditors would
have the right to elect to receive cash at $8.889 per share up to
an aggregate maximum amount of $100 million, through a repurchase
by AmWest of a portion of the shares to be issued to unsecured
creditors under a plan of reorganization.

warrants would have value only after the unsecured creditors receive
full recovery on their claims.

4. In exchange for certain concessions principally arising from
cancellation of the right of GPA affiliates to "put" to America
West 10 Airbus A320 aircraft at fixed rates, GPA, or certain
affiliates thereof, would receive (i) 7.5 percent of the new common
equity in the reorganized Company, (ii) warrants to purchase up to
2.5 percent of the reorganized Company's common stock on the same
terms as the AmWest warrant, (iii) $3 million in new senior
unsecured debt securities, and (iv) the right to require the
Company to lease up to eight aircraft of types operated by the
Company from GPA prior to June 30, 1999 on terms which the Company
believes to be more favorable those currently applicable to the
"put" aircraft. For an additional discussion of the put rights,
see Item 2. Properties -- Aircraft, below.
------

7. The Investment Agreement also provides for many other matters,
including the disposition of the various types of claims asserted
against the Company, the adherence to the Company's aircraft lease
agreements, the amendment of the Company's aircraft purchase
agreements and release of the Company's employees from all
currently existing obligations arising under the Company's stock
purchase plan in consideration for the cancellation of the shares
of Company stock securing such obligations.

The Company has also entered into a Revised Interim Procedures Agreement
(the "Procedures Agreement") with AmWest. The Procedures Agreement is
subject to the approval of the Bankruptcy Court and sets forth terms and
conditions upon which the Company must operate prior to the effective
date of a confirmed plan of reorganization based upon the terms of the
Investment Agreement. The Procedures Agreement provides for the
reimbursement of expenses (up to a maximum of $3.55 million) as
well as a termination fee of up to $8 million under certain conditions.
As of March 29, 1994, the Procedures Agreement had not received
Bankruptcy Court approval, but a hearing in this regard is scheduled for
April 12, 1994.

The Company is currently developing with AmWest a plan of reorganization
based upon the foregoing terms. The Equity Committee has agreed to
support the plan. The Creditors' Committee has indicated that it does
not support the current terms of the Investment Agreement. Another
group interested in developing a plan of reorganization with the Company
has also proposed to invest $155 million in equity securities and $65
million in new senior unsecured debt securities. The proponent of this
proposal would receive a 33.5 percent ownership interest in the
reorganized Company, current equity holders would receive a 4.0 percent
ownership interest in the reorganized Company and the unsecured
creditors would receive a 62.5 percent ownership interest in the
reorganized Company.

Exclusivity Period. On February 2, 1994, the Bankruptcy Court approved
------------------
the Company's request to extend its exclusivity period to file a plan of
reorganization through June 10, 1994. In its motion, the Bankruptcy
Court confirmed the official committees' (Creditors' and Equity
Committees) right to also file a plan of reorganization during this
period of exclusivity.

Possible Limitation on NOL and Business Tax Credit Carryforwards. As of
----------------------------------------------------------------
December 31, 1993, the Company has a net operating loss ("NOL") and
general business tax credit carryforwards of approximately $530 million
and $12.7 million, respectively. Under Section 382 of the Internal
Revenue Code of 1986, if a loss corporation has an "ownership change"
within a designated testing period, its ability to use its NOL and
credit carryforwards are subject to certain limitations. The Company is
a loss corporation within the meaning of Section 382. To the best of
the Company's knowledge, the Company has not undergone an "ownership
change" that would result in any material limitation of the Company's
ability to use its NOL and business credit carryforwards in future tax
years, as of December 31, 1993. However, should an "ownership change"
occur prior to confirmation of a plan of reorganization, the Company's
ability to utilize such carryforwards would be significantly restricted.
Further, any "ownership change" as a result of the Company's
reorganization under the Bankruptcy Code may result in carryforward
usage limitations.

In this regard, the Company filed a motion with the Bankruptcy Court on
February 10, 1994 to prohibit the sale or other transfers of any general
unsecured claims, the convertible subordinated debentures or shares of
any class of stock. The motion attempted to preserve the Company's tax
assets as such sales and transfers in sufficient numbers and amounts
could, under current tax law, jeopardize the preservation of the
Company's net operating loss and general business tax credit
carryforwards. At the request of the official committees, the Company
withdrew its motion without prejudice on February 16, 1994. On March
11, 1994, the Company again filed a motion with the Bankruptcy Court to
prohibit the sale or other transfer of shares of any class of the
Company's stock to or from five percent or more shareholders. This
motion is more limited in scope than the motion filed on February 10,
1994 in that it seeks only to restrict transfers of stock which could
have an adverse effect on the Company's ability to fully utilize its NOL
carryforwards. On March 15, 1994, the Bankruptcy Court ordered that
this motion be converted to an adversary proceeding under the Bankruptcy
rules. As of March 29, 1994, no hearing on such proceeding has been held.
There can be no assurance that the Company will continue to pursue this
matter and, if the

Company continues to pursue this matter, that it will be successful. See
Item 8. Financial Statements and Supplementary Data -- Note 5 of Notes to
------
Financial Statements.

Results of Operations
---------------------

The Company realized net income of $37.2 million ($1.50 per common
share) for 1993 compared to net losses of $131.8 million ($5.58 per common
share) and $222 million ($10.39 per common share) for 1992 and 1991,
respectively. The results for 1993 include reorganization expenses of $25
million and losses aggregating $4.6 million primarily resulting from the
disposition of surplus spare aircraft parts and equipment. During 1992,
the Company recorded restructuring charges of $31.3 million, reorganization
expenses of $16.2 million and a gain of $15 million from the sale of its
Honolulu to Nagoya, Japan route, while the 1991 results were affected by
reorganization expenses of $58.4 million. The Company was only one of two
major U.S. airlines to report a profit in each quarter of 1993.

The Company began to realize significant improvement in its operating
results commencing the fourth quarter of 1992. During 1993, the level of
operating income improved each quarter as shown in the table below.

1993 Quarterly Results (unaudited)
(in millions)
-------------------------------------------
1st 2nd 3rd 4th Year
----- ----- ----- ----- ------

Total Operating Revenues $316.6 $324.9 $335.1 $348.8 $1,325.4

Total Operating Expenses 299.4 299.7 302.1 303.1 1,204.3
----- ----- ----- ----- -------
Operating Income $ 17.2 $ 25.2 $ 33.0 $ 45.7 $ 121.1
===== ===== ===== ===== =======

The improvement in operating results for 1993 compared to 1992 and 1991
is attributable to several factors, the most significant of which are noted
below.

* A gradually improving economic climate, and a more stable environment
relative to fare competition within the airline industry.

* The reduction in fleet size from 123 aircraft in July 1991 to the
current fleet of 85 aircraft has facilitated a better matching of
capacity to demand. In addition, the consolidation of the fleet from
five to three aircraft types has enabled the Company to further reduce
its level of costs including those related to maintenance, training and
inventories of parts.

* In addition to reducing or eliminating certain routes as part of the
aircraft fleet downsizing, the Company implemented certain enhancements
to its revenue management system in an effort to optimize the level of
passenger revenues generated on each flight. Such enhancements enable
the Company to more effectively allocate seats within various fare
categories.

* The implementation of numerous cost reduction programs since 1991
including a Company-wide pay reduction in August of 1991 and reductions
of aircraft lease rentals to fair market rates in the fall of 1992.

* The elimination of the Company's commuter operation and the introduction
of three code sharing agreements have enabled the Company to expand its
scope of service and attract a broader passenger base.

The effect of these programs and the other factors described above
resulted in operating income of $121.1 million for 1993 compared to
operating losses of $74.8 million and $104.7 million for 1992 and 1991,
respectively.

Total operating revenues were $1.3 billion in 1993, an increase of 2.4
percent compared to the prior year and 6.3 percent less than 1991 primarily
due to the significant reduction in capacity. On April 1, 1993, the
Company ceased service to Hawaii. Passenger revenues for 1993, 1992 and
1991 were $1.2 billion, $1.2 billion and $1.3 billion, respectively.
Summarized below are certain capacity and traffic statistics for the years
ended December 31, 1993, 1992 and 1991.

Percent Change To
-----------------
1993 1992 1991 1992 1991
---------- ---------- ---------- -------- -------

Aircraft (End of Period) 85 87 101 (2.3) (15.8)

Available Seat Miles (000) 17,190,489 19,271,353 20,627,472 (10.8) (16.7)

Revenue Passenger Miles (000) 11,220,753 11,780,568 13,030,279 (4.8) (13.9)

Load Factor (%) 65.3 61.1 63.2 6.9 3.3

Passenger Enplanements (000) 14,740 15,173 16,907 (2.9) (12.8)

Average Journey Miles 970 990 962 (2.0) .8

Average Stage Length 645 631 598 2.2 7.9

Yield Per Revenue Pax Mile (cents) 11.11 10.31 10.22 7.8 8.7

Revenue Per Available Seat Mile:

Passenger (cents) 7.25 6.30 6.46 15.1 12.2

Total (cents) 7.71 6.72 6.85 14.7 12.6

In spite of the significant decline in capacity in 1993 compared to the
two previous years, passenger revenues per available seat mile improved by
15.1 percent and 12.2 percent compared to 1992 and 1991, respectively.
This improvement was primarily attributable to the combination of the
following factors.

* An improved climate relative to the economy and industry fare
competition.

* The reduction in aircraft fleet size in conjunction with the
implementation of enhancements to the Company's revenue management
systems.

* The elimination of "fare simplification" in 1993 and 50 percent-off
sales that occurred on an industry-wide basis in the second and
third quarters of 1992.

* The 50 percent-off sale conducted by the Company on a system-wide
basis in February 1991.

Revenues from sources other than passenger fares decreased during 1993
to $78.8 million compared to $79.3 million and $81.7 million for 1992 and
1991, respectively. Freight and mail revenues comprised 51.0 percent, or
$40.2 million, of other revenues for 1993. This represents a decrease of
4.6 percent compared to 1992 and 8.0 percent compared to 1991. For the
years 1993, 1992 and 1991, the Company carried 110.7 million, 116.4 million
and 119.8 million pounds of freight and mail, respectively. The decline in
freight and mail revenues during the last three years is a direct result of
capacity reductions, the most significant of which relate to the cessation
of service to Hawaii and Nagoya, Japan. The balance of other revenues
includes revenues generated from: pilot training; contract services
provided to other airlines for maintenance and ground handling; reduced
rate fares; alcoholic beverage and headset sales; and service charges
assessed for refunds, reissues and prepaid ticket advices.

In spite of the significant reductions in capacity which have occurred
since the filing of protection under Chapter 11, operating expense per
available seat mile has declined to 7.01 cents for 1993 from 7.10 cents for
1992 and 7.36 cents for 1991. The table below sets forth the major
categories of operating expense per available seat mile for 1993, 1992 an
1991:

(in cents) Percent Change To
-----------------
1993 1992 1991 1992 1991
---- ---- ---- ---- ----

Salaries and Related Costs 1.78 1.68 1.86 6.0 (4.3)

Rentals and Landing Fees 1.60 1.76 1.70 (9.1) (5.9)

Aircraft Fuel .97 .97 1.08 -- (10.2)

Agency Commissions .62 .55 .62 12.7 --

Aircraft Maintenance Materials
and Repairs .18 .20 .20 (10.0) (10.0)

Depreciation & Amortization .48 .45 .47 6.7 2.1

Restructuring Charges -- .16 -- -- --

Other 1.38 1.33 1.43 3.8 (3.5)
---- ---- ---- ---- -----

7.01 7.10 7.36 1.3 4.8
==== ==== ==== ==== ====

The changes in the components of operating expense per available seat
mile should be considered in relation to the decline in available seat
miles of 10.8 percent and 16.7 percent from 1992 and 1991, respectively,
and are explained as follows:

* The 6.0 percent increase in salaries and related costs compared to 1992
is a result of the decline in capacity as well as the implementation of
a transition pay program in the second quarter of 1993. The transition
pay program was designed to restore a portion of the 10 percent wage
reduction that was effected company-wide on August 1, 1991 (officers and
other management personnel received wage reductions of 10 percent to 25
percent commencing in February 1991). All wages have been frozen at
such levels since 1991. The program, which is to be in effect for the
earlier of four fiscal quarters or until the confirmation of a plan of
reorganization, provides for the following payments on a quarterly
basis to all active employees during the quarter.

a. Commencing the second quarter of 1993, performance award
distributions have been made based upon the Company meeting or
exceeding its operating income target for a given quarter as
incorporated in its business plan. The aggregate award for 1993
amounted to approximately $6.5 million including applicable payroll
taxes.

b. Commencing the third quarter of 1993, employment award
distributions have been made based on the greater of .5 percent of
an employee's annual base wage, or $125, which ever is higher, on a
quarterly basis. The aggregate award for 1993 amounted to
approximately $2.6 million including applicable payroll taxes.

The favorable variance compared to the 1991 level was primarily
attributable to the reduction in payroll costs related to the decline in
capacity as well as overhead and the Company-wide wage reduction
instituted in August 1991.

* Rentals and landing fees decreased due to the reduction in fleet size to
85 aircraft as well as the reduction in rental rates to fair market for
certain aircraft commencing in August 1992 for a period of two years.

* Aircraft fuel decreased due to the decline in the average price per
gallon to 61.05 cents from 62.70 cents for 1992 and 67.10 cents for
1991.

* The increase in the level of agency commission expense is primarily due
to the significant increase in passenger revenue per available seat mile
from 6.30 cents and 6.46 cents for 1992 and 1991, respectively, to 7.25
cents for 1993.

* The decrease in aircraft maintenance materials and repairs is primarily
due to the change in the composition of the aircraft fleet.

* Restructuring charges incurred in 1992 consisted of the following:

(in millions of dollars)

Write-off for certain assets related to
station closures or route restructuring $ 9.5

Provision for spare parts for aircraft types 12.7
no longer in service

Provision for employee severance 2.3

Loss on return of aircraft 6.8
----

$31.3
====

The restructuring charges were necessitated by aircraft fleet reductions
and other operational changes. The Company reduced its fleet to 87
aircraft at the end of 1992 as well as eliminated two of five aircraft
types it operated. Additionally, employee headcount was reduced by
approximately 1,500 employees and service was terminated to ten cities
through the end of 1992.

* The increase in depreciation and amortization is primarily attributable
to increased heavy engine overhauls.

* Other operating expenses increased 3.8 percent compared to 1992 but was
lower by 3.5 percent compared to 1991. The increase compared to the
prior year is primarily attributable to the 10.8 percent decline in
capacity.

Non-operating expenses (net of non-operating income) for 1993, 1992 and
1991 were $83.1 million, $56.9 million and $117.4 million, respectively.
Interest expense decreased to $54.2 million in 1993 from $55.8 million in
1992 and $61.9 million in 1991. In conformity with Statement of Position
90-7, "Financial Reporting by Entities in Reorganization under the
Bankruptcy Code", issued by the American Institute of Certified Public
Accountants, the Company has ceased accruing and paying interest on
unsecured pre-petition long-term debt. Had the Company continued to accrue
interest on such debt, interest expense for 1993, 1992 and 1991 would have
been $73.0 million, $73.9 million and $79.3 million, respectively. See
Item 8. Financial Statements and Supplementary Data -- Notes 3a and 4 of
------
Notes to Financial Statements.

The Company incurred expenses of $25 million in 1993, $16.2 million in
1992 and $58.4 million in 1991 in connection with its efforts to reorganize
under Chapter 11. Such expenses for 1993 include net charges aggregating
$18.2 million in accruals for unsecured claims and settlements of
administrative claims primarily relating to leased aircraft which were
returned to the lessors. Reorganization related expenses are expected to
significantly affect future results and to continue until such time as the
Company has obtained approval for its plan of reorganization.

Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 Accounting for Income Taxes, (SFAS 109).
---------------------------
Since there was no cumulative effect of this change in accounting, prior
year financial statements have not been restated.

Additionally, Statements of Financial Accounting Standards No. 106 Post
----
Retirement Benefits Other Than Pensions, (SFAS 106) became effective
---------------------------------------
January 1, 1993. The Company does not provide any post retirement
benefits, thus, the standard has no impact. Statement of Financial
Accounting Standard No. 112, Employer's Accounting for Post Employment
-----------------------------------------
Benefits, (SFAS 112) becomes effective January 1, 1994. This statement
--------
requires that post employment benefits be treated as part of compensation
provided to an employee in exchange for service. Previously, most
employers expensed the cost of these benefits as the benefits were
provided. The Company is still reviewing the impact of SFAS 112, but does
not believe it will have a material effect.

Liquidity And Capital Resources
-------------------------------

At December 31, 1993, the Company had a working capital deficiency of
$124.4 million and net shareholders' deficiency of $254.3 million. The
1993 working capital deficiency decreased from the 1992 deficiency of
$201.6 million primarily as result of principal repayments on obligations
and significantly improved operating results.

Cash and cash equivalents amounted to $99.6 million at December 31, 1993
compared to $74.4 million at December 31, 1992. Net cash provided by
operating activities increased to $153.4 million for 1993 compared to $76.7
million for 1992 and $19.9 million for 1991. During 1993, the Company
incurred capital expenditures of $54.3 million compared to $69.2 million in
1992. The capital expenditures for 1993 consisted largely of aircraft
modifications and heavy airframe and engine overhauls.

The Company's transition pay program which was implemented in the second
quarter of 1993 is scheduled to terminate in the second quarter of 1994.
The Company announced certain amendments to its compensation program on
March 24, 1994. Effective April 1, 1994, employee base wages will be
increased between two percent to eight percent depending on the employee's
length of service with the Company. Generally, each employee whose
anniversary date occurs between April and December 1994 will also receive
an additional increase on such date approximating 4% with certain
exceptions. The Chairman of the Board and the President will not
participate in the salary increase program. Due to the current collective
bargaining process with the representatives of the pilots, increases in
pilots' salaries will not be paid but will be accrued. The distribution of
such amounts will be determined through the collective bargaining
discussions. The Company is currently in the process of revising its
entire compensation program and anticipates implementing such program
effective January 1, 1995.

The Company has also announced that, effective April 1, 1994, matching
contributions by the Company under the America West 401(k) plan will be
increased from 25 percent to 50 percent of the first six percent
contributed by the employees, subject to certain limitations. This change
restores the Company's matching contribution to the level that existed
prior to the Chapter 11 filing.

The Company estimates that the implementation of the increases in pay
and the 401(k) matching contributions will result in increased costs of
approximately $18 million during the last nine months of 1994.

Under Delaware law, as well as the Company's D.I.P. loan agreement and
the bankruptcy process, the Company is precluded from paying dividends on
its outstanding preferred stock until such time as the total shareholders'
deficiency is eliminated. During 1993 the Series B 10.5 percent
convertible preferred stock (291,149 shares) with a liquidation preference
of $15 million was converted into 1,164,596 shares of common stock of the
Company.

In 1991, affiliates of Guinness Peat Aviation ("GPA"), Northwest
Airlines, Inc. ("Northwest") and Kawasaki Leasing International Inc.
("Kawasaki") provided $78 million in D.I.P. financing to the Company. In
September 1992, America West received an additional $53 million in D.I.P.
financing, bringing the total outstanding D.I.P. financing at December 31,
1992, to $110.8 million which consisted of $69.8 million from GPA, $23
million from Kawasaki, $10 million from Ansett Worldwide Aviation Services
("Ansett") and $8 million from several Arizona-based entities. The D.I.P.
financing is collateralized by substantially all of the Company's assets.

The financing provided by Northwest was repaid in full at the time of
the September 1992 D.I.P. financing. America West also reconstituted its
board of directors concurrent with the September 1992 D.I.P. financing.
In September 1993, the D.I.P. lenders extended the maturity date of the
D.I.P. financing from September 30, 1993 to June 30, 1994. At the time
of the September 1993 extension, the financing provided by Ansett was
repaid in full. The principal terms of the September 1993 extension are
discussed below.

Interest on all funds advanced under the D.I.P. financing accrues at 3.5
percent over the 90-day London Interbank Offered Rate ("LIBOR") and is
payable quarterly. Principal repayments in the amount of $5.54 million
were made on March 1993 and June 1993. As a result of the September 1993
extension of the D.I.P. financing maturity date, the Company is required to
repay $5 million of the D.I.P. financing on March 31, 1994. The remaining
outstanding balance will be due upon the earlier of June 30, 1994 or upon
the effective date of a confirmed Chapter 11 plan of reorganization (the
"Reorganization Date"). As a condition to extending the maturity date of
the D.I.P. financing in September 1993, the Company also agreed to pay a
facility fee of $627,000 to the D.I.P. lenders on September 30, 1993 and to
pay an additional facility fee equal to 1/4 percent of the then outstanding
balance of the D.I.P. financing on March 31, 1994. As of December 31,
1993, the outstanding amount due under the D.I.P. financing was
approximately $83.6 million. Presently, the Company does not possess
sufficient liquidity to satisfy the D.I.P. financing nor does it appear
that new equity capital will be obtained and a plan of reorganization
confirmed prior to June 30, 1994. Consequently, the Company will be
required to obtain alternative repayment terms from its current D.I.P.
lenders. Although there can be no assurance that alternative repayment
terms will be obtained, the Company believes that any required extension of
the D.I.P. financing would be for a short period of time and would be
concurrent with the implementation of a plan of reorganization. During
the first quarter of 1994, the Company notified the D.I.P. lenders
that the Company's unrestricted cash exceeded $125 million; however,
to date, the D.I.P. lenders have not exercised their prepayment rights.

As a condition to the closing of the September 1992 D.I.P. financing,
the Company was required to reduce its aircraft fleet to 86 aircraft and
the number of aircraft types from five to three. Consequently, the Company
reached certain agreements with third parties, which included the
following:

1. With the exception of four lessors (two of which participated in
the September 1992 D.I.P. financing), aircraft lessors whose
aircraft were retained in the fleet and whose payments were
deferred during July and August 1992, were required to waive any
default which occurred as a result of such non-payments and to
defer these payments without interest until the first calendar
quarter of 1993. In addition, effective August 1, 1992, the rental
rates on these retained aircraft were reduced to fair market rental
rates for a period of two years or longer. The August 1992
payments were deferred at the reduced interest rates.

Of the remaining two lessors, one accepted rental payment
reductions and the other agreed to a deferral of the rents from
July through October 1992. Repayment of this deferral is monthly
over seven years beginning November 1992 at level principal and
interest at 90 day LIBOR plus 3.5 percent.

2. The aircraft lessors who accepted rent reductions and agreed to
waive any administrative claims arising from the reductions
stipulated that, if prior to July 31, 1994, the Company defaults on
any of these leases and the aircraft are repossessed, the lessors
are entitled to fixed damages ranging from $500,000 to $2,000,000
(depending on the type of aircraft) as well as any other damages that
can be claimed for breach of their leases, all of which will be
afforded priority as administrative claims. Lessors of 12 aircraft
have the option, beginning August 1, 1994, to reset the rents to
the then current fair market rental rates (additionally, certain of
these leases call for multiple resets subsequent to the August 1,
1994 reset date). In February 1994, the Company commenced
negotiations with certain lessors with respect to determining the
requisite reset rates.

Lessors of 16 aircraft have call rights which generally provide for
the acceleration of the lease termination to the 180th day after
receipt by the Company of notice from the lessor that the lessor
has a bona fide written offer to lease the aircraft to an unrelated
third party. The Company in turn has a ten day right of first
refusal after receipt of such notice to match the written offer.
Lessors of 10 of aircraft also have the right to call their
aircraft during specified periods without having received a bona
fide offer to lease their aircraft and without offering the Company
a right of first refusal. The lessor of 11 aircraft has the right
to call its aircraft on 90 days notice after to the end of the
original lease term of the aircraft. If a lessor exercises its
call option, and 1991 deferred rents are still outstanding under
the terminated lease, repayment of this deferral is not
accelerated. Such deferral will continue to amortize over its
original term; however, at a reduced interest rate of 90 day LIBOR
plus 3.5 percent. See also Item 1. Business -- Bankruptcy And
------
Reorganization Events -- Route Structure and Aircraft Fleet
Reductions.

3. Certain principal and interest payments on owned aircraft due in
July 1992 were deferred without interest and were repaid by March
31, 1993. Additionally, certain other principal and interest
payments due from August 1992 through January 1993 were deferred
and are being repaid beginning February 1993 over terms of five to
nine years with interest at approximately 10.25 percent.

In lieu of payment deferrals, two aircraft lenders agreed to
interest rate reductions of approximately three percent on their
outstanding aircraft loans to the Company, resulting in interest
rates of approximately 7.25 percent.

4. Two of the current D.I.P. lenders, amended their existing rights to
put up to ten aircraft each to the Company such that a total of
fourteen aircraft may be put to the Company beginning in 1994
through 1996. Such aircraft would be put to the Company under
prearranged lease agreements. As of February 28, 1994, the Company
has not received any notification from the parties exercising any
of their put rights.

In September 1993, the D.I.P. loan agreement was amended and the
maturity date was extended from September 30, 1993 to June 30, 1994. The
principal financial terms of the amended D.I.P. loan agreement include the
following:

1. The repayment of $8.3 million to the loan participant who did not
agree to the maturity date extension.

2. The outstanding principal balance at September 30, 1993 becomes due
on June 30, 1994 or the confirmation of a plan of reorganization,
whichever occurs earlier, with the exception of a principal
repayment of $5 million on March 31, 1994.

3. The amended terms of the D.I.P. financing require the Company to
notify the D.I.P. lenders if the unrestricted cash balance of the
Company exceeds $125 million. Upon receipt of such notice, the
D.I.P. lenders may require the Company to prepay the D.I.P.
financing by the amount of such excess. During the first quarter
of 1994, the Company notified the D.I.P. lenders that the Company's
unrestricted cash exceeded $125 million; however, to date, the
D.I.P. lenders have not exercised their prepayment rights.

4. Certain of the financial covenants were revised which the Company
believes provide it with increased flexibility. In general, such
covenants relate to operating results, liquidity, capital
expenditures, collateral values and lease payments.

5. A facility fee of 3/4 percent of the outstanding balance, or
$627,000, was paid to the participants on September 30, 1993. In
addition, an additional 1/4 percent of the then outstanding balance
must be paid on March 31, 1994.

Presently, the Company does not possess sufficient liquidity to satisfy
its D.I.P. loan obligation nor does it appear that a plan of reorganization
could be confirmed prior to June 30, 1994. Consequently, the Company will
be required to obtain alternative repayment terms from its current D.I.P.
lenders, but there can be no assurances that such alternative repayment
terms will be agreed to by the D.I.P. lenders.

During 1993, the Company repaid approximately $18.4 million of scheduled
aircraft lease payments which were deferred in 1991 and 1992 as well as
$27.2 million of principal repayment related to the D.I.P. loan.

As a condition of the D.I.P. financing, the Company obtained from most
of its aircraft providers rent or principal and interest deferrals in
excess of $100 million for the six-month period of June through November
1991. In general, the deferred amounts accrue interest at 10.5 percent.
In December 1991, the Company began repaying such deferred amounts. See
Item 8. Financial Statements and Supplementary Data -- Note 11 of Notes to
------
Financial Statements.

Under the terms of the D.I.P. financing, Northwest acquired the
Company's Honolulu to Nagoya, Japan route for $15 million in 1992. Upon
the completion of the sale of the Nagoya route, $10 million of the proceeds
from the sale were paid to Northwest to reduce the Company's obligation to
Northwest under the D.I.P. financing. The balance of the proceeds from the
sale of the Nagoya route were added to the Company's working capital.

In connection with the D.I.P. financing provided by Kawasaki, the
Company agreed to convert advanced cash credits for 24 Airbus A320 aircraft
(the "Kawasaki Aircraft") previously advanced by Kawasaki into an unsecured
priority term loan (the "Kawasaki Term Loan"). At December 31, 1993, the
amount of the Kawasaki Term Loan was $68.4 million, including accrued
interest of $21.9 million. Until the Reorganization Date, the Kawasaki
Term Loan will accrue interest at 12 percent per annum and such
interest will be added to principal. On the Reorganization Date, 85
percent of the Kawasaki Term Loan will be converted into an eight-year term
loan which will accrue interest at 2 percent over 90-day LIBOR and will be
secured by substantially all the assets of the Company if the D.I.P.
financing is fully repaid. Principal on such loan will be due and payable
in equal quarterly installments, plus interest commencing after the
Reorganization Date. The Company has the right to prepay the Kawasaki Term
Loan if the D.I.P. financing is fully repaid. The remaining 15 percent of
the Kawasaki Term Loan will be treated as a general unsecured claim without
priority status under the Company's plan of reorganization. In the first
quarter of 1994, the Company received information that the Kawasaki Term
Loan was purchased by a third party.

The reorganization process is expected to result in the cancellation
and/or restructuring of substantial debt obligations of the Company. Under
the Bankruptcy Code, the Company's pre-petition liabilities are subject to
settlement under a plan of reorganization. The Bankruptcy Code also
requires that all administrative claims be paid on the effective date of a
plan of reorganization unless the respective claimants agree to different
treatment. There are differences between the amounts at which claims
liabilities are recorded in the financial statements and the

amounts claimed by the Company's creditors and such differences are material.
Significant litigation may be required to resolve any disputes.

Due to the uncertain nature of many of the potential claims, America
West is unable to project the magnitude of such claims with any degree of
certainty. However, the claims (pre-petition claims and administrative
claims) that have been filed against the Company are in excess of $2
billion. Such aggregate amount, includes claims of all character,
including, but not limited to, unsecured claims, secured claims, claims
that have been scheduled but not filed, duplicative claims, tax claims,
claims for leases that were assumed, and claims which the Company believes
to be without merit; however, claims filed for which an amount was not
stated, are not reflected in such amount. The Company is unable to estimate
the potential amount of such unstated claims; however, the amount of such
claims could be material.

The Company is in the process of reviewing the general unsecured claims
asserted against the Company. In many instances, such review process will
include the commencement of Bankruptcy Court proceedings in order to
determine the amount at which such claims should be allowed. The Company
has accrued its estimate of claims that will be allowed or the minimum
amount at which it believes the asserted general unsecured claims will be
allowed if there is no better estimate within the range of possible
outcome. However, the ultimate amount of allowed claims will be different
and such differences could be material. The Company is unable to estimate
the amount of such difference with any reasonable degree of certainty at
this time.

As part of its claims administration procedure, the Company is reviewing
potential claims that could arise as a result of the Company's rejection of
executory contracts. The Company's plan of reorganization will provide for
the status of any executory contract not theretofore assumed by either
affirming or rejecting such contracts. The assumption or rejection of
certain executory contracts could result in additional claims against the
Company.

At December 31, 1993, the Company had a total of 93 aircraft on order,
of which 51 are firm and 42 are options. The current estimated aggregate
cost for these firm commitments and options is approximately $5.2 billion.
Future aircraft deliveries are planned in some instances for incremental
additions to the Company's existing aircraft fleet and in other instances
as replacements for aircraft with lease terminations occurring during this
period. The purchase agreement to acquire 24 Boeing 737-300 aircraft had
been affirmed in the Company's bankruptcy proceeding. With timely notice
to the manufacturer, all or some of these deliveries may be converted to
Boeing 737-400 aircraft. As of December 31, 1993, eight Boeing 737
delivery positions had been eliminated due to the lack of a required
reconfirmation notice by the Company to Boeing. The failure to reconfirm
these delivery positions exposes the Company to loss of pre-delivery
deposits and other claims which may be asserted by Boeing in the
Bankruptcy proceeding. The purchase agreements for the remaining aircraft
types have not been assumed and, the Company has not yet determined which
of the other aircraft purchase agreements, if any, will be affirmed or
rejected. The Company also has a pre-petition executory contract under
which the Company holds delivery positions for four Boeing 747-400 aircraft
under firm orders and another four under options. The contract allows the
Company, with the giving of adequate notice, to substitute other Boeing
aircraft types for the Boeing 747-400 in these delivery positions. As a
result, the Company is still evaluating its future fleet needs and is
currently unable to determine if it will substitute other aircraft types or
reject this agreement. The Company believes it will be successful in
negotiating new aircraft purchase agreements that will meet its needs.
However, there can be no assurances that the Company will enter into such
agreements. As of December 31, 1993, the Company had deposits on aircraft
orders of approximately $52 million of which approximately $21 million were
financed.

During 1994, leases relating to four Boeing 737-200 aircraft, two Airbus
A320 aircraft and two Boeing 757 aircraft are scheduled to expire. The
Company has negotiated extensions of the leases for all but one of the
Airbus A320 aircraft for terms ranging from one to three years. The
Airbus A320 aircraft to be returned to the lessor will be replaced by a
Boeing 757 aircraft which has been leased for a term of three years. In
addition, up to nine Airbus A320 aircraft may be put to the Company should
GPA and/or Kawasaki elect to exercise its put options. As of February 28,
1994, none of the put options have been exercised. Lease agreements have
been arranged for such put aircraft for terms of five to eighteen years at
specified monthly lease rate factors.

Item 8. Financial Statements and Supplementary Data.
------ -------------------------------------------

Financial statements of the Company as of December 31, 1993 and 1992,
and for each of the years in the three-year period ended December 31, 1993,
together with the related notes and the Report of KPMG Peat Marwick,
independent certified public accountants, are set forth on the following
pages. Other required financial information and schedules are set forth
herein, as more fully described in Item 14 hereof.

Independent Auditors' Report
----------------------------

The Board of Directors and Stockholders
America West Airlines, Inc., D.I.P.:

We have audited the accompanying balance sheets of America West Airlines,
Inc., D.I.P. (the Company) as of December 31, 1993 and 1992, and the
related statements of operations, cash flows and stockholders' equity
(deficiency) for each of the years in the three-year period ended
December 31, 1993. In connection with our audits of the financial
statements, we also have audited the financial statement schedules V, VI,
VIII and X for each of the years in the three-year period ended
December 31, 1993. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of America West Airlines,
Inc., D.I.P. as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1993 in conformity with generally accepted
accounting principles. Also in our opinion, the financial statement
schedules, when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the information
set forth therein.

The accompanying financial statements and financial statement schedules have
been prepared assuming that the Company will continue as a going concern.
As discussed in note 1 to the financial statements, on June 27, 1991 the
Company filed a voluntary petition seeking to reorganize under Chapter 11
of the federal bankruptcy laws. This event and circumstances relating to
this event, including the Company's significant losses, accumulated deficit
and highly leveraged capital structure, raise substantial doubt about its
ability to continue as a going concern. Although the Company is currently
operating as debtor-in-possession under the jurisdiction of the Bankruptcy
Court, the continuation of the business as a going concern is contingent
upon, among other things, the ability to (1) file a Plan of Reorganization
which will gain approval of the creditors and stockholders and confirmation
by the Bankruptcy Court, (2) maintain compliance with all debt covenants
under the debtor-in-possession financing agreements, (3) achieve
satisfactory levels of future operating results and cash flows and (4)
obtain additional debt and equity. Also, as discussed in note 1 to the
financial statements, as part of the Company's bankruptcy proceeding there
is uncertainty as to the amount of claims that will be allowed and as to a
number of disputed claims which are materially in excess of amounts reflected
in the accompanying financial statements. The accompanying financial
statements and financial statement schedules do not include any adjustments
that might result from the outcome of these uncertainties.

KPMG PEAT MARWICK

Phoenix, Arizona
March 18, 1994

F-1

AMERICA WEST AIRLINES, INC., D.I.P.

Balance Sheets
December 31, 1993 and 1992

Assets 1993 1992
------ ---------- ----------
(in thousands)

Current assets:

Cash and cash equivalents (note 4) $ 99,631 $ 74,383
Accounts receivable, less allowance for
doubtful accounts of $3,030,000 in
1993 and $2,542,000 in 1992 (note 11) 65,744 64,817
Expendable spare parts and supplies,
less allowance for obsolescence of
$7,231,000 in 1993 and $6,921,000 in 1992 28,111 34,431
Prepaid expenses 34,939 37,807
---------- ----------

Total current assets 228,425 211,438
---------- ----------

Property and equipment (notes 2, 4, 11 and 12):

Flight equipment 872,104 841,239
Other property and equipment 180,607 189,755
---------- ----------
1,052,711 1,030,994
Less accumulated depreciation and
amortization 385,776 328,870
---------- ----------
666,935 702,124
Equipment purchase deposits 51,836 52,431
---------- ----------
718,771 754,555
---------- ----------

Restricted cash (note 11) 46,296 40,612

Other assets (note 12) 23,251 29,836
---------- ----------

$1,016,743 $1,036,441
========== ==========

See accompanying notes to financial statements.

F-2

AMERICA WEST AIRLINES, INC., D.I.P.

Balance Sheets
December 31, 1993 and 1992

Liabilities and Stockholders' Deficiency 1993 1992
---------------------------------------- ---------- ----------
(in thousands)

Current liabilities:
Current maturities of long-term debt (note 4) $ 125,271 $ 156,656
Accounts payable (note 11) 62,957 90,629
Air traffic liability 118,479 107,496
Accrued compensation and vacation benefits 11,704 13,004
Accrued interest 8,295 15,647
Accrued taxes 14,114 15,765
Other accrued liabilities 11,980 13,808
---------- ----------

Total current liabilities 352,800 413,005
---------- ----------

Estimated liabilities subject to Chapter 11
proceedings (notes 2 and 4) 381,114 348,322

Long-term debt, less current maturities
(notes 4 and 11) 396,350 411,989
Manufacturers' and deferred credits (note 11) 73,592 84,694
Other liabilities (note 11) 67,149 73,044

Commitments, contingencies and subsequent events
(notes 1, 2, 4, 6, 7, 9, 11 and 12)

Stockholders' deficiency (notes 1, 4, 6, 7, 8,
9 and 12):
Preferred stock, $.25 par value. Authorized
50,000,000 shares:
Series B 10.5% convertible preferred stock,
issued and outstanding 291,149 shares in
1992; $5.41 per share cumulative dividend
(liquidation preference $15,000,000) - 73
Series C 9.75% convertible preferred stock
issued and outstanding 73,099 shares;
$1.33 per share cumulative dividend
(liquidation preference $1,000,000) 18 18
Common stock, $.25 par value. Authorized
90,000,000 shares; issued and outstanding
25,291,102 shares in 1993 and 23,967,663
shares in 1992 6,323 5,992
Additional paid-in capital 197,010 195,407
Accumulated deficit (438,626) (475,791)
---------- ----------
(235,275) (274,301)
Less deferred compensation and notes
receivable - employee stock purchase
plans (note 6) 18,987 20,312
Total stockholders' deficiency (254,262) (294,613)
---------- ----------

$1,016,743 $1,036,441
========== ==========

See accompanying notes to financial statements.

F-3

AMERICA WEST AIRLINES, INC., D.I.P.

Statements of Operations
Years ended December 31, 1993, 1992 and 1991
(in thousands except per share amounts)

1993 1992 1991
----------- ----------- -----------

Operating revenues:
Passenger $ 1,246,564 $ 1,214,816 $ 1,332,191
Cargo 40,161 42,077 43,651
Other 38,639 37,247 38,083
----------- ----------- -----------
Total operating revenues 1,325,364 1,294,140 1,413,925
----------- ----------- -----------
Operating expenses:
Salaries and related costs 305,429 324,255 383,833
Rentals and landing fees 274,708 338,391 349,563
Aircraft fuel 166,313 186,042 223,347
Agency commissions 106,368 106,661 128,134
Aircraft maintenance materials and repairs 31,000 38,366 41,649
Depreciation and amortization 81,894 86,981 97,803
Restructuring charges (note 13) - 31,316 -
Other 238,598 256,940 294,253
----------- ----------- -----------
Total operating expenses 1,204,310 1,368,952 1,518,582
----------- ----------- -----------
Operating income (loss) 121,054 (74,812) (104,657)
----------- ----------- -----------

Nonoperating income (expense):
Interest income 728 1,418 5,724
Interest expense (contractual interest of
$72,961, $73,931 and $79,271 for 1993,
1992 and 1991, respectively (note 4) (54,192) (55,826) (61,912)
Loss on disposition of property and
equipment (4,562) (1,283) (1,600)
Reorganization expense, net (note 2) (25,015) (16,216) (58,440)
Other, net (notes 4 and 11) (89) 14,958 (1,131)
----------- ----------- -----------
Total nonoperating expense, net (83,130) (56,949) (117,359)
----------- ----------- -----------
Income (loss) before income taxes 37,924 (131,761) (222,016)
----------- ----------- -----------
Income taxes (note 5) 759 - -
----------- ----------- -----------
Net income (loss) $ 37,165 $ (131,761) $ (222,016)
=========== =========== ===========
Earnings (loss) per share:
Primary $ 1.50 $ (5.58) $ (10.39)
=========== =========== ===========
Fully diluted $ 1.04 $ (5.58) $ (10.39)
=========== =========== ===========

Shares used for computation:
Primary 27,525 23,914 21,534
=========== =========== ===========
Fully diluted 41,509 23,914 21,534
=========== =========== ===========

See accompanying notes to financial statements.

F-4

AMERICA WEST AIRLINES, INC., D.I.P.

Statements of Cash Flows
Years ended December 31, 1993, 1992 and 1991
(in thousands of dollars)

1993 1992 1991
----------- ----------- -----------

Cash flows from operating activities:
Net income (loss) $ 37,165 $ (131,761) $ (222,016)
Adjustments to reconcile net income
(loss) to cash provided by operating
activities:
Depreciation and amortization 81,894 86,981 97,803
Amortization of manufacturers' and
deferred credits (5,186) (5,869) (9,851)
Loss on disposition of property and
equipment 4,562 1,283 1,600
Restructuring charges - 31,316 -
Reorganization items 18,167 3,188 44,273
Other (554) 866 9,242
Changes in operating assets and liabilities:
Decrease in short-term investments - - 19,705
Decrease (increase) in accounts receivable,
net (927) 19,418 (13,945)
Decrease (increase) in spare parts and
supplies, net 6,320 (2,384) (3,227)
Decrease in prepaid expenses 2,627 812 3,208
Increase in other assets and restricted
cash (5,295) (1,141) (21,053)
Increase (decrease) in accounts payable 9,014 (8,473) 65,083
Increase (decrease) in air traffic
liability 8,749 30,723 (41,256)
Decrease in accrued compensation and vacation
benefits (1,300) (1,491) (909)
Increase in accrued interest 10,368 25,640 23,676
Increase (decrease) in accrued taxes (1,764) 2,968 (2,945)
Increase in other accrued liabilities 644 18,204 4,594
Increase (decrease) in other liabilities (11,126) 6,465 65,945
----------- ----------- -----------
Net cash provided by operating
activities 153,358 76,745 19,927

Cash flows from investing activities:
Purchases of property and equipment (54,324) (69,208) (96,803)
Decrease (increase) in equipment purchase
deposits - 14,425 (7,294)
Proceeds from disposition of property 3,715 383 275
Proceeds from manufacturers' credits - - 5,100
----------- ----------- -----------
Net cash used in investing
activities (50,609) (54,400) (98,722)

(Continued)

F-5

AMERICA WEST AIRLINES, INC., D.I.P.

Statements of Cash Flows, Continued
Years ended December 31, 1993, 1992 and 1991
(in thousands of dollars)

1993 1992 1991
----------- ----------- -----------

Cash flows from financing activities:
Proceeds from issuance of D.I.P. financing $ - $ 53,000 $ 78,000
Proceeds from issuance of debt - 22,804 -
Repayment of debt (77,501) (75,871) (44,939)
Proceeds from issuance of common stock - - 7,265
Preferred dividends paid - - (423)
----------- ----------- -----------
Net cash provided by (used in)
financing activities (77,501) (67) 39,903
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents 25,248 22,278 (38,892)
----------- ----------- -----------
Cash and cash equivalents at beginning
of year 74,383 52,105 90,997
----------- ----------- -----------
Cash and cash equivalents at end of year $ 99,631 $ 74,383 $ 52,105
=========== =========== ===========

See accompanying notes to financial statements.

F-6

AMERICA WEST AIRLINES, INC., D.I.P.

Statements of Stockholders' Equity (Deficiency)

Years ended December 31, 1993, 1992, and 1991

(in thousands of dollars except per share amounts)

Notes Receivable
and Deferred
Convertible Additional Compensation
Preferred Common Paid-In Accumulated Employee Stock
Stock Stock Capital Deficit Purchase Plans Total
----------- ------ ---------- ----------- ---------------- ---------

Balance at January 1, 1991 $ 91 $ 4,832 $ 156,573 $ (118,669) $ (21,686) $ 21,141

Issuance of 253,422 shares
of common stock sold at:
$5.50 per share, net of
expenses - 63 1,331 - - 1,394
Issuance of 2,755,938 shares
of common stock pursuant to
convertible subordinated
debentures - 689 28,084 - - 28,773
Issuance of 10,841 shares
of common stock pursuant
to exercise of stock
options and warrants - 3 38 - - 41
Repurchase of 1,356 shares
of common stock pursuant
to employee restricted
stock plan - - (8) - - (8)
Repurchase of 3,659 shares
of common stock pursuant
to employee stock
purchase plan - (1) (23) - - (24)
Employee restricted stock
deferred compensation - - (1) - 214 213
Employee stock purchase plan:
Issuance of 1,271,765
shares of common stock
at:
$.94-$7.50 per share - 318 4,601 - (889) 4,030
Deferred compensation - - 1,230 - 389 1,619
Preferred stock dividends
Series B: $5.41 per share - - - (1,575) - (1,575)
Series C: $1.33 per share - - - (98) - (98)
Net loss - - - (222,016) - (222,016)
---- ------- --------- ---------- --------- --------
Balance at December 31, 1991 91 5,904 191,825 (342,358) (21,972) (166,510)
---- ------- --------- ---------- --------- --------
Issuance of 346,661 shares
of common stock pursuant
to convertible subordinated
debentures - 86 3,599 - - 3,685
Employee restricted stock
deferred compensation - - - - 101 101
Employee stock purchase plan:
Issuance of 7,305 shares
of common stock at:
$.19-$2.63 per share - 2 (13) - 81 70
Deferred compensation - - (4) - 1,478 1,474
Preferred stock dividends
Series B: $5.41 per share - - - (1,575) - (1,575)
Series C: $1.33 per share - - - (97) - (97)
Net loss - - - (131,761) - (131,761)
---- ------- --------- ---------- --------- --------
Balance at December 31, 1992 91 5,992 195,407 (475,791) (20,312) (294,613)
---- ------- --------- ---------- --------- --------

(Continued)

F-7

AMERICA WEST AIRLINES, INC., D.I.P.

Statements of Stockholders' Equity (Deficiency), Continued

Years ended December 31, 1993, 1992, and 1991

(in thousands of dollars except per share amounts)

Balance at December 31, 1992 $ 91 $ 5,992 $ 195,407 $ (475,791) $ (20,312) $(294,613)
---- ------- --------- ---------- --------- ---------
Issuance of 170,173 shares
of common stock pursuant
to Series B convertible
subordinated debentures - 43 1,896 - - 1,939
Issuance of 1,164,596 shares
of common stock pursuant
to convertible preferred
stock (73) 291 (218) - - -
Employee restricted stock
deferred compensation - - - - 21 21
Employee stock purchase plan:
Cancellation of 11,330
shares of common stock at:
$.22-$1.59 per share - (3) (38) - 49 8
Deferred compensation - - (37) - 1,255 1,218
Net income - - - 37,165 - 37,165
---- ------- --------- ---------- --------- ---------
Balance at December 31, 1993 $ 18 $ 6,323 $ 197,010 $ (438,626) $ (18,987) $(254,262)
==== ======= ========= ========== ========= =========

See accompanying notes to financial statements.

F-8

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements
December 31, 1993, 1992 and 1991

(1) Reorganization Under Chapter 11, Liquidity, Financial Condition and
-------------------------------------------------------------------
Subsequent Events
-----------------

On June 27, 1991, America West Airlines, Inc., D.I.P. (the "Company"
or "America West") filed a voluntary petition in the United States
Bankruptcy Court for the District of Arizona (the "Bankruptcy Court")
to reorganize under Chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Code"). The Company is currently operating as a
debtor-in-possession ("D.I.P.") under the supervision of the
Bankruptcy Court. As a debtor-in-possession, the Company is
authorized to operate its business but may not engage in transactions
outside its ordinary course of business without the approval of the
Bankruptcy Court.

Subject to certain exceptions under the Bankruptcy Code, the Company's
filing for reorganization automatically enjoined the continuation of
any judicial or administrative proceedings against the Company. Any
creditor actions to obtain possession of property from the Company or
to create, perfect or enforce any lien against the property of the
Company are also enjoined. As a result, the creditors of the Company
are precluded from collecting pre-petition debts without the approval
of the Bankruptcy Court.

The Company had the exclusive right for 120 days after the Chapter 11
filing on June 27, 1991 to file a plan of reorganization and 60
additional days to obtain necessary acceptances of such plan. Such
periods may be extended at the discretion of the Bankruptcy Court, but
only on a showing of good cause, and extensions have been obtained
such that the Company has until June 10, 1994 to file its plan of
reorganization with the Court or obtain an additional extension.
Subject to certain exceptions set forth in the Bankruptcy Code,
acceptance of a plan of reorganization requires approval of the
Bankruptcy Court and the affirmative vote (i.e. 50% of the number and
66- 2/3% of the dollar amount) of each class of creditors and equity
holders whose claims are impaired by the plan.

Certain pre-petition liabilities have been paid after obtaining the
approval of the Bankruptcy Court, including certain wages and benefits
of employees, insurance costs, obligations to foreign vendors and
governmental agencies, travel agent commissions and ticket refunds.
The Company has also been allowed to honor all tickets sold prior to
the date it filed for reorganization. In addition, the Company is
authorized to pay pre-petition liabilities to essential suppliers of
fuel, food and beverages and to other vendors providing critical goods
and services. Subsequent to filing and with the approval of the
Bankruptcy Court, the Company assumed certain executory contracts of
essential suppliers.

Parties to executory contracts may, under certain circumstances, file
motions with the Bankruptcy Court to require the Company to assume or
reject such contracts. Unless otherwise agreed, the assumption of a
contract will require the Company to cure all prior defaults under the
related contract, including all pre-petition liabilities unless terms
can be negotiated. Unless otherwise agreed, the rejection of a
contract is deemed to constitute a breach of the agreement as of the
moment immediately preceding Chapter 11 filing, giving the other party
to the contract a right to assert a general unsecured claim for
damages arising out of the breach.

(Continued)
F-9

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

February 28, 1992 was set as the last date for the filing of proof of
claims under the Bankruptcy Code and the Company's creditors have
submitted claims for liabilities not paid and for damages incurred.
There may be differences between the amounts at which any such
liabilities are recorded in the financial statements and the amount
claimed by the Company's creditors. Significant litigation may be
required to resolve any such disputes.

The Company has incurred and will continue to incur significant costs
associated with the reorganization. The amount of these costs, which
are being expensed as incurred, is expected to significantly affect
results of operations.

As a result of its filing for protection under Chapter 11 of the
Bankruptcy Code, the Company is in default of substantially all of its
debt agreements. All outstanding pre-petition unsecured debt of the
Company has been presented in these financial statements within the
caption Estimated Liabilities Subject to Chapter 11 Proceedings.

Additional liabilities subject to the proceedings may arise in the
future as a result of the rejection of executory contracts, including
leases, and from the determination by the Bankruptcy Court (or
agreement by parties in interest) of allowed claims for contingencies
and other disputed amounts. Conversely, the assumption of executory
contracts and unexpired leases may convert liabilities shown as
subject to Chapter 11 proceedings to post-petition liabilities.

Substantially all of the aircraft, engines and spare parts in the
Company's fleet are subject to lease or secured financing agreements
that entitle the Company's aircraft lessors and secured creditors to
rights under Section 1110 of the Bankruptcy Code. Pursuant to
Section 1110, the Company had 60 days from the date of its Chapter 11
filing, or until August 26, 1991, to bring its obligations to these
aircraft lessors and secured creditors current and/or reach other mu-
tually satisfactory negotiated arrangements. In September 1991, as a
condition to the borrowings under the initial $55 million D.I.P.
facility, the Company arranged for rent, principal and interest
payment deferrals from a majority of its aircraft providers as a
condition to the assumption of the related lease or secured borrowing
by the Company. As a result of these arrangements, the Company was
able to assume the executory contracts associated with 83 aircraft in
its fleet without having to bring its obligations to these aircraft
providers current. In addition, as part of the initial D.I.P.
facility, the Company assumed and brought current lease agreements
for 16 Airbus A320 aircraft, three CFM engines, a Boeing 757-200 and
a Boeing 737-300. Twenty-two aircraft were deemed surplus to the
Company's needs and the associated executory contracts were rejected.
Included in 1991 reorganization costs is $35.2 million in write-offs
of leasehold improvements, security deposits, accrued maintenance,
accrued rents and other costs to return the aircraft which were
subject to the rejected aircraft agreements. In certain cases, final
agreements were reached with such aircraft providers and no further
claims by such providers will be pursued as a result of the
rejections. In other instances, the aircraft providers have filed
claims in the normal course of the bankruptcy and as of December 31,
1993 significant claims for rejected aircraft have not yet been
settled.

(Continued)
F-10

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

Due to the uncertain nature of many of the potential claims, the
Company is unable to project the magnitude of such claims with any
degree of certainty. However, the claims (pre-petition claims and
administrative claims) that have been filed against the Company are in
excess of $2 billion. Such aggregate amount includes claims of all
character, including, but not limited to, unsecured claims, secured
claims, claims that have been scheduled but not filed, duplicative
claims, tax claims, claims for leases that were assumed, and claims
which the Company believes to be without merit; however, claims filed
for which an amount was not stated, are not reflected in such amount.
The Company is unable to estimate the potential amount of such
unstated claims; however, the amount of such claims could be material.

The Company is in the process of reviewing the general unsecured
claims asserted against the Company. In many instances, such review
process will include the commencement of Bankruptcy Court proceedings
in order to determine the amount at which such claims should be
allowed. The Company has accrued its estimate of claims that will be
allowed or the minimum amount at which it believes the asserted
general unsecured claims will be allowed if there is no better
estimate within the range of possible outcomes. However, the
ultimate amount of allowed claims will be different and
such differences could be material. The Company is unable to estimate
the amount of such differences with any reasonable degree of certainty
at this time.

The Bankruptcy Code requires that all administrative claims be paid on
the effective date of a plan of reorganization unless the respective
claimants agreed to different treatment. Consequently, depending on
the ultimate amount of administrative claims allowed by the Bankruptcy
Court, the Company may be unable to obtain confirmation of a plan of
reorganization. The Company is actively negotiating with claimants to
achieve mutually acceptable dispositions of these claims. Since the
commencement of the bankruptcy proceeding, claims alleging
administrative expense priority totaling more than $153 million have
been filed and an additional claim of $14 million has been alleged.
As of February 28, 1994, $115 million of the filed claims have been
allowed and settled for $50.2 million in the aggregate. The Company
is currently negotiating the resolution of the remaining $38 million
filed administrative expense claim (which relates to a rejected lease
of a Boeing 737-300 aircraft) and the alleged $14 million
administrative claim (which relates to a rejected lease of a Boeing
757-200 aircraft). Claims have been or may be asserted against the
Company for alleged administrative rent and/or breach of return
conditions (i.e. maintenance standards), guarantees and tax
indemnity agreements related to aircraft or engines abandoned
or rejected during the bankruptcy proceedings. Additional
claims may be asserted against the Company and allowed by the
Bankruptcy Court. The amount of such unidentified administrative
claims may be material.

(Continued)
F-11

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

Plan of Reorganization
----------------------

Under the Bankruptcy Code, the Company's pre-petition liabilities are
subject to settlement under a plan of reorganization. Pursuant to an
extension granted by the Bankruptcy Court on February 2, 1994, the
Company has the partially exclusive right, until June 10, 1994 (unless
extended by the Bankruptcy Court), to file a plan of reorganization.
Each of the official committees has also been approved to submit a
plan of reorganization. The exclusivity period may be extended by the
Bankruptcy Court upon a showing of cause after notice has been given
and a hearing has been held, although no assurance can be given that
any additional extensions will be granted if requested by the Company.
The Company has agreed not to seek additional extensions of the
exclusivity period without the advance consent of the Creditors'
Committee and the Equity Committee.

On December 8, 1993 and February 16, 1994, the Bankruptcy Court
entered certain orders which provided for a procedure pursuant to
which interested parties could submit proposals to participate in a
plan of reorganization for America West. The Bankruptcy Court also
set February 24, 1994 as the date for America West to select a "Lead
Plan Proposal" from the proposals submitted.

On February 24, 1994, America West selected as its Lead Plan Proposal
an investment proposal submitted by AmWest Partners, L.P., a limited
partnership ("AmWest"), which includes Air Partners II, L.P.,
Continental Airlines, Inc., Mesa Airlines, Inc. and Fidelity
Management Trust Company. On March 11, 1994, the Company and AmWest
entered into a revised investment agreement which substantially
incorporates the terms of the AmWest investment proposal (the
"Investment Agreement"). The Investment Agreement provides that
AmWest will purchase from America West equity securities representing
a 37.5% ownership interest in the Company for $120 million and $100
million in new senior unsecured debt securities. The Investment
Agreement also provides that, in addition to the 37.5% ownership
interest in the Company, AmWest would also obtain 72.9% of the total
voting interest in America West after the Company is reorganized. The
terms of the Investment Agreement will be incorporated into a plan of
reorganization to be filed with the Bankruptcy Court; however,
modifications to the Investment Agreement may occur prior to the
submission of a plan of reorganization and such modifications may be
material. There can be no assurance that a plan of reorganization
based upon the Investment Agreement will be accepted by the parties
entitled to vote thereon or confirmed by the Bankruptcy Court.

In addition to the interest in the reorganized America West that would
be acquired by AmWest pursuant to the Investment Agreement, the
Investment Agreement also provides for the following:

1. The D.I.P. financing would be repaid in full with cash on the
date a plan of reorganization is confirmed ("Reorganization Date").

(Continued)
F-12

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

2. On the Reorganization Date, unsecured creditors would receive 45%
of the new common equity in the reorganized Company, with the
potential to receive up to 55% of such equity if within one year
after the Reorganization Date, the value of the securities dis-
tributed to them has not provided them with a full recovery under
the Bankruptcy Code. In addition, unsecured creditors would have
the right to elect to receive cash at $8.889 per share up to an
aggregate maximum amount of $100 million, through a repurchase by
AmWest of a portion of the shares to be issued to unsecured
creditors under a plan of reorganization.

3. Holders of equity interests would have the right to receive up to
10% of the new common equity of the Company, depending on certain
conditions principally involving a determination as to whether
the unsecured creditors had received a full recovery on account
of their claims. In addition, holders of equity interests would
have the right to purchase up to $15 million of the new common
equity in the Company for $8.296 per share from AmWest, and would
also receive warrants entitling them to purchase, together with
AmWest, up to 5% of the reorganized Company's common stock, at a
price to be set so that the warrants would have value only after
the unsecured creditors would have received full recovery on
their claims.

4. In exchange for certain concessions principally arising from
cancellation of the right of Guinness Peat Aviation ("GPA")
affiliates to put to America West 10 Airbus A320 aircraft at
fixed rates, GPA, or certain affiliates thereof, would receive
(i) 7.5% of the new common equity in the reorganized Company,
(ii) warrants to purchase up to 2.5% of the reorganized Company's
common stock on the same terms as the AmWest warrants, (iii) $3
million in new senior unsecured debt securities, and (iv) the
right to require the Company to lease up to eight aircraft of
types operated by the Company from GPA prior to June 30, 1999 on
terms which the Company believes to be more favorable than those
currently applicable to the put aircraft. See note 11 for an
additional discussion of the put rights.

5. Continental Airlines, Inc., Mesa Airlines, Inc. and America West
would enter into certain alliance agreements which would include
code-sharing, schedule coordination and certain other
relationships and agreements. A condition to proceeding with a
plan of reorganization based upon the Investment Agreement would
be that these agreements be in form and substance satisfactory to
America West, including the Company's reasonable satisfaction
that such alliance agreements when fully implemented will result
in an increase in pre-tax income of not less than $40 million per
year.

(Continued)
F-13

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

7. The Investment Agreement also provides for many other matters,
including the disposition of the various types of claims asserted
against the Company, the adherence to the Company's aircraft
lease agreements, the amendment of the Company's aircraft pur-
chase agreements and release of the Company's employees from all
currently existing obligations arising under the Company's stock
purchase plan in consideration for the cancellation of the shares
of Company stock securing such obligations.

The Company has also entered into a Revised Interim Procedures Agreement
(the "Procedures Agreement") with AmWest. The Procedures Agreement is
subject to the approval of the Bankrupty Court and sets forth terms
and conditions upon which the Company must operate prior to the
effective date of a confirmed plan of reorganization based upon the
terms of the Investment Agreement. The Procedures Agreement provides
for the reimbursement of AmWest's expenses (up to a maximum of $3.6
million) as well as a termination fee of up to $8 million under certain
conditions. The Procedures Agreement has not yet been approved by the
Bankruptcy Court.

The Company is currently developing with AmWest a plan of
reorganization based upon the foregoing terms. The Equity Committee
has agreed to support the plan. The Creditors' Committee has
indicated that it does not support the current terms of the Investment
Agreement. Another group interested in developing a plan of
reorganization with the Company has proposed to invest $155
million in equity securities and $65 million in new senior unsecured
debt securities. The proponent of this proposal would receive a 33.5%
ownership interest in the reorganized Company, current equity holders
would receive a 4% ownership interest in the reorganized Company and
the unsecured creditors would receive a 62.5% ownership interest in
the reorganized company.

Any plan of reorganization must be approved by the Bankruptcy Court
and by specified majorities of each class of creditors and equity
holders whose claims are impaired by the plan. Alternatively, absent
the requisite approvals, the Company may seek Bankruptcy Court
approval of its reorganization plan under Section 1129(b) of the
Bankruptcy Code, assuming certain tests are met. The Company cannot
predict whether any plan submitted by it will be approved.

The Company is currently unable to predict when it may file a plan of
reorganization based upon the Investment Agreement, but intends to do
so as soon as practicable. Once a plan with a disclosure statement is
filed by any party, the Bankruptcy Court will hold a hearing to
determine the adequacy of the information contained in such disclosure
statement. Only upon receiving an order from the Bankruptcy Court
providing that the disclosure statement accompanying any such plan
contains adequate information as required by Section 1125 of the
Bankruptcy Code, may a party solicit acceptances or rejections of any
such plan of reorganization. Following entry of an order approving
the disclosure statement, the plan will be sent to creditors and
equity holders for voting pursuant to both the Bankruptcy Code and
orders that will be entered by the Bankruptcy Court. Following
submission of the plan to holders of claims and equity interests, the
Bankruptcy Court will hold a hearing to consider confirmation of the
plan pursuant to Section 1129 of the Bankruptcy Code. Although the
Bankruptcy Code provides for certain minimum time periods for these
events, the Company is unable to reasonably estimate when a plan based
on the Investment Agreement might be submitted for voting and
confirmation.

(Continued)
F-14

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

If at any time the Creditors' Committee, the Equity Committee or any
creditor of the Company or equity holder of the Company believes that
the Company is or will not be in a position to sustain operations,
such party can move in the Bankruptcy Court to compel a liquidation of
the Company's estate by conversion to Chapter 7 bankruptcy proceedings
or otherwise. In the event that the Company is forced to sell its
assets and liquidate, it is unlikely that unsecured creditors or
equity holders will receive any value for their claims or interests.

The Company anticipates that the reorganization process will result in
the restructuring, cancellation and/or replacement of the interest of
its existing common and preferred stockholders. Because of the
"absolute priority rule" of Section 1129 of the Bankruptcy Code, which
requires that the Company's creditors be paid in full (or otherwise
consent) before equity holders can receive any value under a plan of
reorganization, the Company previously disclosed that it anticipated
that the reorganization process would result in the elimination of the
Company's existing equity interests. Due to recent events, including
sustained improvement in the Company's operating results as well as
general improvement in the condition of the United States' economy and
airline industry, some form of distribution to the equity interests
pursuant to Section 1129 may occur. However, there can be no
assurances in this regard.

The accompanying financial statements have been prepared on a going
concern basis which assumes continuity of operations and realization
of assets and liquidation of liabilities in the ordinary course of
business. As a result of the reorganization proceedings, there are
significant uncertainties relating to the ability of the Company to
continue as a going concern. The financial statements do not include
any adjustments that might be necessary as a result of the outcome of
the uncertainties discussed herein including the effects of any plan
of reorganization.

(2) Estimated Liabilities Subject to Chapter 11 Proceedings and
-----------------------------------------------------------
Reorganization Expense
----------------------

Under Chapter 11, certain claims against the Company in existence
prior to the filing of the petitions for relief under the Code are
stayed while the Company continues business operations as debtor-in-
possession. These pre-petition liabilities are expected to be settled
as part of the plan of reorganization and are classified as "Estimated
liabilities subject to Chapter 11 proceedings."

Estimated liabilities subject to Chapter 11 proceedings as of
December 31, 1993 and 1992 consists of the following:

December 31,
1993 1992
---- ----
(in thousands)

Long-term debt (including convertible
subordinated debentures of $138.9
million and $140.8 million at
December 31, 1993 and 1992,
respectively) (note 4) $224,642 $235,026
Accounts payable and accrued liabilities 113,945 73,488
Accrued interest 16,808 14,261
Accrued taxes 25,719 25,547
-------- --------
$381,114 $348,322
======== ========

(Continued)
F-15

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

The debt balance included above consists of unsecured and secured
obligations and other obligations that have not been affirmed by the
Company through the Bankruptcy Court (note 4).

Reorganization expense is comprised of items of income, expense, gain
or loss that were realized or incurred by the Company as a result of
reorganization under Chapter 11 of the Federal Bankruptcy Code. Such
items consists of the following:

1993 1992 1991
---- ---- ----
(in thousands)

Provisions for pre-petition and
administrative claims $18,231 $ 1,748 $35,203
Professional fees 7,227 11,147 8,531
D.I.P. financing issuance costs 1,378 1,760 2,660
Write-off of debt issuance costs - - 2,773
Employee termination and furlough costs - 561 1,343
Facility closing costs - 2,776 6,796
Interest income (2,635) (2,030) (1,365)
Other 814 254 2,499
------- ------- -------
$25,015 $16,216 $58,440
======= ======= =======

(3) Summary of Significant Accounting Policies
------------------------------------------

(a) Financial Reporting for Bankruptcy Proceedings
----------------------------------------------

On November 19, 1990, the American Institute of Certified Public
Accountants issued Statement of Position 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy
Code" ("SOP 90-7"). SOP 90-7 provides guidance for financial
reporting by entities that have filed petitions with the
Bankruptcy Court and expect to reorganize under Chapter 11 of the
Code.

SOP 90-7 recommends that all such entities report consistently
while reorganizing under Chapter 11, with the objective of
reflecting their financial evolution. To achieve such
objectives, their financial statements should distinguish
transactions and events that are directly associated with the
reorganization from those of the operations of the ongoing
business as it evolves.

SOP 90-7 became effective for financial statements of enterprises
that filed petitions under the Code after December 31, 1990,
although earlier application was encouraged. The Company has
implemented the guidance provided by SOP 90-7 in the accompanying
financial statements.

Pursuant to SOP 90-7, pre-petition liabilities are reported on
the basis of the expected amounts of such allowed claims, as
opposed to the amounts for which those allowed claims may be
settled. Under an approved final plan of reorganization, those
claims may be settled at amounts substantially less than their
allowed amounts.

(Continued)
F-16

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

(b) Cash Equivalents
----------------

Cash equivalents consist of all highly liquid debt instruments
purchased with original maturities of three months or less and
are carried at cost which approximates market.

Restricted cash includes cash held in Company accounts, but
pledged to an institution which processes credit card sales
transactions and cash deposits securing certain letters of
credit.

(d) Expendable Spare Parts and Supplies
-----------------------------------

Flight equipment expendable spare parts and supplies are valued
at average cost. Allowances for obsolescence are provided, over
the estimated useful life of the related aircraft and engines,
for spare parts expected to be on hand at the date the aircraft
are retired from service.

(e) Property and Equipment
----------------------

Property and equipment is stated at cost or, if acquired under
capital leases, at the lower of the present value of minimum
lease payments or fair market value at the inception of the
lease. Interest capitalized on advance payments for aircraft
acquisitions and on expenditures for aircraft improvements is
part of the cost. Property and equipment is depreciated and
amortized to residual values over the estimated useful lives or
the lease term using the straight-line method. The Company
discontinued capitalizing interest on June 27, 1991 due to the
Chapter 11 filing.

The estimated useful lives for the Company's property and equip-
ment range from three to twelve years for owned property and
equipment and to thirty years for the reservation and training
center and technical support facilities. The estimated useful
lives of the Company's owned aircraft, jet engines, flight
equipment and rotable parts range from eleven to twenty-two
years. Leasehold improvements relating to flight equipment and
other property on operating leases are amortized over the life of
the lease or the life of the asset, whichever is shorter.

Routine maintenance and repairs are charged to expense as
incurred. The cost of major scheduled airframe, engine and
certain component overhauls are capitalized and amortized over
the periods benefited and included in depreciation and
amortization expense. Additionally, a provision for the
estimated cost of scheduled airframe and engine overhauls
required to be performed on leased aircraft prior to their return
to the lessors has been provided.

(Continued)
F-17

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

(f) Revenue Recognition
-------------------

Passenger revenue is recognized when the transportation is
provided. Ticket sales for transportation which has not yet been
provided are reflected in the financial statements as air traffic
liability.

(g) Passenger Traffic Commissions and Related Fees
----------------------------------------------

Passenger traffic commissions and related fees are expensed when
the transportation is provided and the related revenue is
recognized. Passenger traffic commissions and related fees not
yet recognized are included as a prepaid expense.

(h) Income Taxes
------------

Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income
Taxes.

As more fully discussed at note 5, adoption of the new standard
changes the Company's method of accounting for income taxes from
the deferred approach to an asset and liability approach.

As with the prior standard, the Company continues to account for
its investment tax credits and general business credits by use of
the flow-through method.

(i) Per Share Data
--------------

Primary earnings (loss) per share is based upon the weighted
average number of shares of common stock outstanding and dilutive
common stock equivalents (stock options and warrants). Primary
earnings per share reflect net income adjusted for interest on
borrowings effectively reduced by the proceeds from the assumed
conversion of common stock equivalents.

Fully diluted earnings per share in 1993 is based on the average
number of shares of common stock and dilutive common stock
equivalents outstanding adjusted for conversion of outstanding
convertible preferred stock and convertible debentures. Fully
diluted earnings per share reflects net income adjusted for
interest on borrowings effectively reduced by the proceeds from
the assumed conversion of common stock equivalents.

(Continued)
F-18

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

(j) Frequent Flyer Awards
---------------------

The Company maintains a frequent travel award program known as
"FlightFund" that provides a variety of awards to program members
based on accumulated mileage. The estimated cost of providing
the free travel, using the incremental cost method as adjusted
for estimated redemption rates, is recognized as a liability and
charged to operations as program members accumulate mileage.

(k) Manufacturers' and Deferred Credits
-----------------------------------

In connection with the acquisition of certain aircraft and
engines, the Company receives various credits. Such
manufacturers' credits are deferred until the aircraft and
engines are delivered, at which time they are either applied as a
reduction of the cost of acquiring owned aircraft and engines,
resulting in a reduction of future depreciation expense, or
amortized as a reduction of rent expense for leased aircraft and
engines.

(l) Fair Value of Financial Instruments
-----------------------------------

The fair value estimates and assumptions used in developing the
estimates of the Company's financial instruments are as follows:

Cash and Cash Equivalents
-------------------------

The carrying amount approximates fair value because of the short
maturity of those instruments.

Accounts Receivable and Accounts Payable
----------------------------------------

The carrying amount of accounts receivable and accounts payable
approximates fair value as they are expected to be collected or
paid within 90 days of year-end.

Long-term Debt and Estimated Liabilities Subject to Chapter 11
--------------------------------------------------------------
Proceedings
-----------

The fair value of long-term debt and estimated liabilities
subject to Chapter 11 proceedings cannot readily be estimated as
quoted market prices are not available. Additionally, future
cash flows cannot be estimated as the repayment of these in-
struments is subject to disposition within the bankruptcy
proceedings.

(m) Reclassifications
-----------------

Certain prior year reclassifications have been made to conform to
the current year presentation.

(Continued)
F-19

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

(4) Long-term Debt
--------------

Long-term debt consists of the following:

December 31,
1993 1992
---- ----
(in thousands)

D.I.P. financing, secured by substantially
all Company assets (a) $ 83,577 $110,784

Note payable to aircraft provider for
advance credits (a) 68,356 60,732

Notes payable secured by aircraft (b) 306,837 327,267

Line of credit agreements (c) 18,589 24,979

Note from an aircraft engine provider (d) 7,191 12,392

Notes payable secured by flight simulators (e) 20,064 22,804

Notes payable to administrative claimants (f) 10,734 -

Other 6,273 9,687
-------- --------
521,621 568,645
Less current maturities (125,271) (156,656)
-------- --------

$396,350 $411,989
======== ========

(Continued)
F-20

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

Long-term debt included in estimated liabilities subject to Chapter 11
proceedings consists of the following:

December 31,
1993 1992
---- ----
(in thousands)

7-3/4% convertible subordinated debentures
due 2010 (g) $ 30,477 $ 30,752

7-1/2% convertible subordinated debentures
due 2011 (h) 31,709 32,069

11-1/2% convertible subordinated debentures
due 2009 (i) 76,722 78,025

Note payable to an aircraft provider for
deferred pre-delivery payments (j) 21,126 21,126

Line of credit agreement (k) 9,854 11,000

Industrial development revenue bonds (l) 29,497 29,497

Letter of credit draws secured by rotable
parts (m) 22,967 23,113

Other 2,290 9,444
-------- --------
$224,642 $235,026
======== ========

As part of the Chapter 11 reorganization process, the Company is
required to notify all known or potential claimants for the purpose of
identifying all pre-petition claims against the Company. Additional
bankruptcy claims and pre-petition liabilities may arise by termina-
tion of various contractual obligations and as certain contingent
and/or potentially disputed bankruptcy claims are allowed for amounts
which may differ from those shown on the balance sheet.

As discussed in note 1, payment of these liabilities, including
maturity of debt obligations, is stayed while the debtor continues to
operate as a debtor-in-possession. As a result, contractual terms
have been suspended with respect to debt subject to the Chapter 11
proceedings. The following paragraphs include discussion of the
original contractual terms of the long-term debt; however, the
maturity and terms of the long-term debt subsequent to the petition
date may differ as a result of negotiations that take place as part of
the plan of reorganization.

(Continued)
F-21

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

No principal or interest may be paid on pre-petition debt without the
approval of the Bankruptcy Court. The Company has continued to accrue
and pay interest on its long-term debt related to D.I.P. financing,
affirmed long-term debt and secured debt included in estimated
liabilities subject to Chapter 11 proceedings only to the extent that,
in the Company's opinion, the value of underlying collateral exceeds
the principal amount of the secured claim. The Company believes it is
probable such interest will be an allowed secured claim as part of the
bankruptcy proceeding. Except as otherwise stated above, the Company
ceased accruing interest on pre-petition debt as of June 27, 1991, due
to uncertainties relating to a final plan of reorganization.

(a) In September 1991, the Company completed arrangements for a $55
million D.I.P. credit facility. The D.I.P. credit facility is
secured by a first priority lien senior to all other liens on
substantially all existing assets of the Company, except that
such lien is junior in priority to Permitted First Liens (as such
term is defined in the D.I.P. credit facility documents) with
respect to the property encumbered thereby. In December 1991,
the Company completed arrangements for an additional $23 million
of D.I.P. financing under terms and conditions substantially the
same as those associated with the $55 million D.I.P. credit
facility. Quarterly interest payments for the D.I.P. financings
commenced in the quarter ending December 31, 1991 at the 90-day
London Interbank Offered Rate (LIBOR) plus 3.5% and quarterly
principal repayments of $3.9 million were to commence in
September 1992 with the balance due in September 1993, or earlier
upon confirmation of an approved plan of reorganization.

In connection with the $23 million of D.I.P. financing, the
Company agreed to convert advanced cash credits for 24 Airbus
A320 aircraft previously provided to the Company into an
unsecured priority term loan. At December 31, 1993, the amount
of the term loan was $68.4 million including accrued interest of
$21.9 million. Until the Reorganization Date, the term loan
will accrue interest at 12% per annum and such interest will be
added to the principal balance. On the Reorganization Date,
85% of the outstanding balance will be converted into an
eight-year term loan which will accrue interest at 2% over 90-day
LIBOR and will be secured by substantially all the assets of the
Company if the D.I.P. financing is fully repaid. Principal
payments will be made in equal quarterly installments, plus
interest, commencing after the Reorganization Date. The Company
has the right to prepay the loan if the D.I.P. financing is fully
repaid. The remaining 15% of the term loan will be treated as a
general unsecured claim without priority status under the Company's
plan of reorganization. In the first quarter of 1994, the Company
received information that the term loan was purchased by a third
party.

(Continued)
F-22

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

In connection with the D.I.P. financing, a D.I.P. lender agreed
to acquire the Company's Honolulu to Nagoya, Japan route for $15
million. The Nagoya route sale was finalized in March 1992,
resulting in a gain of $15 million, which is included in other
non-operating income in the accompanying statement of operations.
Upon the completion of the sale of the Nagoya route, $10 million
of the proceeds from the sale were paid to the lender to reduce
the Company's obligation to the lender under the D.I.P. fi-
nancing. The balance of the proceeds from the sale of the Nagoya
route were added to the Company's working capital. The remaining
D.I.P. balance was paid to this lender in connection with the
September 1992 D.I.P. Facility.

In September 1992, the Company completed arrangements to expand
its existing D.I.P. financing by an additional $53 million (the
"September 1992 D.I.P. Facility").

As a condition to the closing of the September 1992 D.I.P.
Facility, the Company was required to reduce its aircraft fleet
and the number of aircraft types from five to three pursuant to
certain agreements with third parties, including the following:

1. With the exception of four lessors (two of which
participated in the September 1992 D.I.P. Facility and did
not defer or reduce their lease payments), aircraft lessors
whose aircraft were retained in the fleet and who agreed to
payment deferrals during July and August 1992, were required
to waive any default which occurred as a result of such non-
payments and to defer these payments without interest until
the first calendar quarter of 1993. In addition, effective
August 1, 1992, the rental rates on these retained aircraft
were reduced to fair market lease rates for a two-year
period. The rental rates adjust to market rates effective
August 1, 1994.

Of the remaining two lessors, one accepted rental payment
reductions and the other agreed to a deferral of the rents
from July through October 1992. Repayment of this deferral
is monthly over seven years beginning November 1992 at level
principal and interest at 90-day LIBOR plus 3.5%.

(Continued)
F-23

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

The Company also agreed in certain cases that lessors could
call the aircraft upon 180 days notice if the lessor had a
better lease proposal from another party which the Company
was unwilling to match. During the period August 1, 1994
through July 31, 1995, certain of these lessors may call
their aircraft without first giving the Company the right to
match any competing offer. Call rights with a right of
first refusal affect 16 aircraft and call rights without a
right of first refusal affect 10 aircraft. In addition, in
order to induce several lessors to extend the lease terms of
their aircraft, the Company agreed that the aircraft could
be called by the lessors at the end of the original lease
term. One lessor of 11 aircraft has the right to terminate
each lease at the end of the original lease term of each
aircraft. Such lessor also has the right to call its
aircraft on 90 days notice at any time prior to the end of
the amended lease term. America West has no right of first
refusal with respect to such aircraft. To date, no lessor
has exercised its call rights.

3. Certain principal and interest payments relating to owned
aircraft due in July 1992 were deferred without interest and
were repaid by March 31, 1993. Additionally, certain other
principal and interest payments due from August 1992 through
January 1993 were deferred and repaid beginning
February 1993 over five to nine years with interest at
approximately 10.25%. In lieu of payment deferrals, two of
the aircraft lenders agreed to adjust the interest rates
based on 90-day LIBOR plus 3.5% per annum.

In September 1993, the Bankruptcy Court approved an amendment to
the D.I.P. loan agreement extending the maturity date of the loan
from September 30, 1993 to June 30, 1994. Concurrent with the
extension of the maturity date, $8.3 million of the principal
balance was repaid to one of the participants who did not agree
with the amendment. Interest on all funds advanced under the
D.I.P. facility accrues at 3.5% per annum, over 90-day LIBOR and
is payable quarterly. The amended D.I.P. loan agreement defers
all principal payments to the earlier of June 30, 1994 or
the effective date of a confirmed Chapter 11 plan of
reorganization with the exception of $5 million that will be
due on March 31, 1994. The amended terms of the D.I.P.
financing require the Company to notify the D.I.P. lenders
if the unrestricted cash balance of the Company exceeds
$125 million. Upon receipt of such notice, the D.I.P.
lenders may require the Company to prepay the D.I.P.
financing by the amount of such excess. Subsequent to
December 31, 1993, the Company notified the D.I.P. lenders
that the Company's unrestricted cash exceeded $125 million;
however, the D.I.P. lenders have not exercised their
prepayment rights. The D.I.P. financings contain a minimum
unencumbered cash balance requirement of $55 million at
December 31, 1993 and other financial covenants. At
December 31, 1993, the Company was in compliance with these
covenants.

(Continued)
F-24

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

As a condition to extending the maturity date of the D.I.P.
financing in September 1993, the Company also agreed to pay
a facility fee of $627,000 to the D.I.P. lenders on
September 30, 1993 and to pay an additional facility fee
equal to 1/4% of the then outstanding balance of the D.I.P.
financing on March 31, 1994. Consequently, the outstanding
balance of $83.6 million is classified as a current
liability as of December 31, 1993. Presently, the Company
does not possess sufficient liquidity to satisfy the D.I.P.
financing nor does it appear likely that new equity capital
will be obtained and a plan of reorganization confirmed
prior to June 30, 1994. Consequently, the Company will be
required to obtain alternative repayment terms from the
D.I.P. lenders. There can be no assurance that alternative
repayment terms will be obtained. The Company believes that
any extension of the D.I.P. financing will be for a short
period of time and would be concurrent with the
implementation of a plan of reorganization.

The D.I.P. financings contain a minimum unencumbered cash
balance requirement of $55 million at December 31, 1993 and
other financial covenants. At December 31, 1993, the Company
was in compliance with these covenants.

(b) These notes from financial institutions, secured by seventeen
aircraft with a net book value of $327.6 million, are payable in
semi-monthly, monthly, quarterly and semi-annual installments
ranging from $75,000 to $1,637,000 plus interest at 30-day LIBOR
plus 3.5% (6.88% at December 31, 1993) to 10.79%, with maturities
ranging from 1999 to 2008. Approximately $105.3 million of these
secured notes have provisions providing for the reset of interest
rates at various future dates based on fluctuations in indices
such as the Eurodollar rate. Additionally, interest rates and
principal payments for certain of these notes were modified, as
discussed above, in connection with the September 1992 D.I.P.
Facility.

(c) The Company has a $40 million line of credit that extends to
December 31, 1997 for which no borrowing can occur after
December 31, 1994. The purpose of the line is to provide for the
initial provisioning of spare parts for Airbus A320 aircraft.
The loan is repaid quarterly with level principal payments of
$970,000 each and interest at LIBOR plus 4%. At December 31,
1993 and 1992, the Company had borrowings outstanding of $15.5
million and $20.4 million, respectively, under this credit
facility. However, the lender will not make the unused credit of
$24.5 million available at December 31, 1993 as a result of the
Chapter 11 filing. This loan was affirmed in December 1991 by
the Bankruptcy Court under Section 1110 of the Bankruptcy Code.

The Company also has a $25 million line of credit that extends to
September 1997 under which no borrowing could occur after
September 1992. The credit line was used for spare engine parts
and has an interest rate of LIBOR plus 4%. At December 31, 1993
and 1992, the Company had borrowings outstanding of $3.1 million
and $4.6 million, respectively, under this credit facility. In
connection with the financing by this same lender of two aircraft
flight simulators in October 1992 (see (e)), this loan was
affirmed in the bankruptcy proceeding. Consequently, the
outstanding balance at December 31, 1993 is included in long-term
debt.

(Continued)
F-25

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

(d) This note from an aircraft engine manufacturer was originally
made for $30 million in September 1990. The note is secured by
two aircraft, spare engine parts and other equipment. Interest
on the note began to accrue at its inception at 90-day LIBOR plus
2.0%, compounded quarterly, until September 1993 when all such
accrued interest, or approximately $6 million, was paid.
Interest is currently paid quarterly at the same interest rate.
In October 1992, this lender financed two new flight simulators
which were securing this note (see (e)), and this loan was
reduced by the amount of such financing, or approximately $22.8
million. Repayment of the balance of this loan is dependent on
the future delivery of certain firm ordered aircraft scheduled to
begin in November 1996 (however, the related aircraft purchase
agreement has been neither affirmed nor rejected at December 31,
1993). In connection with the above financing of the two flight
simulators, this note was affirmed in the bankruptcy proceedings,
and the outstanding balances at December 31, 1993 and 1992 are
included in long-term debt.

(e) In October 1992, the Company acquired two flight simulators and
executed two notes secured by the simulators. The notes are
payable in 84 equal monthly principal installments, plus accrued
interest at LIBOR plus 2%. However, the Company has the right,
upon the giving of notice to the lender, to fix the interest rate
at the greater of the then current LIBOR plus 2% or 6.375%. In
connection with this financing, the Company affirmed in the
bankruptcy proceedings the agreements for a certain note payable
(see (d) above) and a line of credit (see (c) above).

(f) In 1993, the Company settled three administrative claims with
three four-year promissory notes totaling $9.6 million with
quarterly principal payments and interest at 6%. At December 31,
1993, the outstanding balance of these promissory notes was $8.7
million.

Also in 1993, the Company renegotiated a note for certain ground
equipment for $2 million as part of an administrative claim
settlement which takes effect upon the confirmation of a plan of
reorganization. The Company is required to make adequate
protection payments of $8,000 per month from the settlement date
until plan confirmation, at which time, the note term is 5 years
with interest at 6%.

(g) The Company's 7-3/4% convertible subordinated debentures are
convertible into common stock at $13.50 per share. The
debentures are redeemable at prices ranging from 101.55% of the
principal amount at December 31, 1993 to 100% of the principal
amount in 1995 and thereafter. Annual sinking fund payments of
$1.5 million are required beginning in 1995.

(h) The Company's 7-1/2% convertible subordinated debentures are
convertible into common stock at $14.00 per share. The
debentures are redeemable at prices ranging from 102.25% of the
principal amount at December 31, 1993 to 100% of the principal
amount in 1996 and thereafter. Annual sinking fund payments of
$1.6 million are required beginning in 1996.

(Continued)
F-26

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

(i) The Company's 11-1/2% convertible subordinated debentures are
convertible into common stock at $10.50 per share. The
debentures are redeemable at prices ranging from 105.75% of the
principal amount from January 1, 1994 to 100% of the principal
amount in 1999 and thereafter. Annual sinking fund payments of
$5.8 million are required beginning in 1999.

During 1991, certain bondholders converted $22.1 million of the
11-1/2% convertible subordinated debentures into common stock.
The conversion of the 11-1/2% subordinated debentures resulted in
a charge to other non-operating expense of $875,000 for
incremental shares issued upon conversion. Certain bondholders
converted $1.4 million of the 7-1/2% convertible subordinated
debentures and $4.4 million of the 7-3/4% convertible
subordinated debentures into common stock.

During 1992, certain bondholders converted $95,000 of the 7-1/2%
convertible subordinated debentures, $100,000 of the 7-3/4%
convertible subordinated debentures and $3.5 million of the
11-1/2% convertible subordinated debentures into common stock.

During 1993, certain bondholders converted $360,000 of the 7-1/2%
convertible subordinated debentures, $275,000 of the 7-3/4%
convertible subordinated debentures and $1.3 million of the
11-1/2% convertible subordinated debentures into common stock.

All of the convertible subordinated debenture interests will be
subject to settlement of their stated amounts in a plan of
reorganization, thereby eliminating the need for continued
deferral of the debt issuance costs. Therefore, the unamortized
debt issuance costs of $2.8 million for these convertible
subordinated debentures were charged to operations as
reorganization expense in 1991. The Company ceased accruing
interest on all of these debentures as of June 27, 1991 in
accordance with SOP 90-7.

(j) This note from an aircraft manufacturer for deferred pre-delivery
payments was required under a purchase agreement entered into in
1990. The deferred pre-delivery payments will accrue interest at
one year LIBOR plus 4% with both principal and interest due upon
delivery of the aircraft. The Company has ceased accruing
interest on the outstanding balance in accordance with SOP 90-7.
The acquisition of the aircraft associated with these deferred
pre-delivery payments is subject to the affirmation or rejection
of the respective aircraft purchase agreement by the Company in
the reorganization proceeding.

(Continued)
F-27

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

(k) The Company has a $20 million secured revolving credit facility
with a group of financial institutions that expired on April 17,
1993. Borrowings under this credit facility were either made
i) at the federal funds rate plus 1%, ii) based on a CD rate or
iii) 90-day LIBOR two business days prior to the first day of the
interest period. The borrowings are secured by certain assets.
The Company is obligated to pay a commitment fee equal to 1/4%
per annum on the average daily amount by which the aggregate
commitments exceed the applicable borrowing base and 1/2% per
annum on the average daily amount by which the lower of the
aggregate commitments or applicable borrowing base exceeds the
aggregate principal amount on all outstanding loans. At
December 31, 1993 and 1992, the Company had an outstanding
balance of $9.9 million and $11 million, respectively, under the
revolving credit agreement. Proceeds from sales of assets
securing the loan were used to prepay the loan during 1993. The
Company ceased accruing interest on the outstanding balance as of
June 27, 1991 in accordance with SOP 90-7.

(l) The holders of industrial development revenue bonds have the
right to put the bonds back to the Company at various times. If
such a put occurs, the Company has an agreement with the
underwriters to remarket the bonds. Any bonds not remarketed
will be retired utilizing a letter of credit. Any funding under
the letter of credit will be in the form of a two-year term loan
at prime plus 2%. During the first quarter of 1991, the Company
redeemed $14.5 million of the $44 million of industrial develop-
ment revenue bonds issued and outstanding and agreed to a seven-
year amortization schedule for the redemption of the remaining
balance. In July and August 1991, $29.5 million in the aggregate
was drawn against the letter of credit facility that supported
these bonds. The Company intends to remarket the bonds in the
future. Such draws were made on behalf of holders of such bonds
who exercised their right to put the bonds back to the Company
for purchase. The bonds are currently held in trust for the
benefit of the Company. These bonds were issued in connection
with the Company's technical support facility.

(m) These draws on a letter of credit from a financial institution,
secured by spare rotable parts with a net book value of $35.8
million, are payable in quarterly installments of $1.3 million
plus interest at prime plus 4.5%. The Company has ceased
accruing interest as of June 27, 1991 on the outstanding balance
in accordance with SOP 90-7.

Maturities of long-term debt, excluding $225 million included in
estimated liabilities subject to Chapter 11 proceedings, for the years
ending December 31 are as follows:

(in thousands)

1994 $ 125,271
1995 41,949
1996 44,957
1997 39,544
1998 32,916
Thereafter 236,984

(Continued)
F-28

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

(5) Income Taxes
------------

Adoption of New Accounting Standard
-----------------------------------

As of January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109).
SFAS 109 is a fundamental change in the manner used to account for
income taxes in that the deferred method has been replaced with an
asset and liability approach. Under SFAS 109, deferred tax assets
(subject to a possible valuation allowance) and liabilities are
recognized for the expected future tax consequences of events that are
reflected in the Company's financial statements or tax returns.

In the year of adoption, SFAS 109 permits an enterprise to record in
its current year financial statements, the cumulative effect (if any)
of the change in accounting principle. Upon adoption, the Company did
not need to record a cumulative effect adjustment.

Income Tax Expense
------------------

For the year ended December 31, 1993, the Company recorded income tax
expense as follows:

Current taxes:
Federal $ 675
State 84
-----

$ 759
=====

Deferred taxes $ -
=====

For the year ended December 31, 1993, income tax expense is solely
attributable to income from continuing operations. The difference in
income taxes at the federal statutory rate ("expected taxes") to those
reflected in the financial statements (the "effective rate") results
from the effect of the benefit of net operating loss carryforwards of
$12.6 million and state income tax expense, net of federal tax
benefit of $55,000, for an effective tax rate of 2%. In 1992 and 1991,
the tax benefits at the federal statutory rate of 34% were offset
by the generation of net operating loss carryforwards.

At December 31, 1993, the Company has available net operating loss,
business tax credit and alternative minimum tax credit carryforwards
for federal income tax purposes of $530.3 million, $12.7 million and
$700,000, respectively. The net operating loss carryforwards expire
during the years 1999 through 2007 while the business credit
carryforwards expire during the years 1997 through 2006. However,
such carryforwards are not fully available to offset federal (and, in
certain circumstances, state) alternative minimum taxable income.
Accordingly, income tax expense recognized for the year ended
December 31, 1993, is attributable to the Company's expected net
current liability for federal and various state alternative minimum
taxes. The alternative minimum tax credit carryforward does not
expire and is available to reduce future income tax payable.

(Continued)
F-29

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

As of December 31, 1993, to the best of the Company's knowledge, it
has not undergone a statutory "ownership change" (as defined in Section
382 of the Internal Revenue Code) that would result in any material
limitation of the Company's ability to use its net operating loss and
business tax credit carryforwards in future tax years. Should an
"ownership change" occur prior to confirmation of a plan of reor-
ganization, the Company's ability to utilize said carryforwards would
be significantly restricted. Further, the net operating loss and
business tax credit carryforwards may be limited as a result of the
Company's reorganization under the United States Bankruptcy Code.

Composition of Deferred Tax Items
---------------------------------

The Company has not recognized any net deferred tax items for the year
ended December 31, 1993. Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Significant components of the
Company's deferred tax assets and liabilities as of December 31, 1993
are a result of the temporary differences related to the items
described as follows:

Net Deferred Items
------------------
(in thousands)

Deferred income tax liabilities:
Property and equipment, principally
depreciation differences $(105,242)
---------

Deferred income tax assets:
Aircraft leases 20,594
Frequent flyer accrual 3,721
Reorganization expenses 16,527
Net operating loss carryforwards 212,124
Tax credit carryforwards 12,706
Other 5,986
---------
Total deferred income tax assets 271,658

Valuation allowance (166,416)
---------

Net deferred items $ -
=========

SFAS 109 requires a "more likely than not" criterion be applied when
evaluating the realizability of a deferred tax asset. Given the
Company's history of losses for income tax purposes, the volatility of
the industry within which the Company operates and certain other
factors, the Company has established a valuation allowance for the
portion of its net operating loss carryforwards that may not be
available due to expirations after considering the net reversals of
future taxable and deductible differences occurring in the same
periods. In this context, the Company has taken into account prudent
and feasible tax planning strategies. After application of the
valuation allowance, the Company's net deferred tax assets and
liabilities are zero.

(Continued)
F-30

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

(6) Employee Stock Purchase Plans and Other Employee Benefit Programs
-----------------------------------------------------------------

The Company has a stock purchase plan covering its directors, officers
and employees and certain other persons providing service to the
Company, as well as a separate plan covering its California resident
employees. At December 31, 1993, the number of shares authorized
under the plans is 10,450,000. Each participating employee is
required to purchase a number of shares having an aggregate purchase
price equivalent to 20% of such employee's annual base wage or salary
on the date of purchase. Each participating employee has the option
of simultaneously purchasing additional shares having an aggregate
purchase price not exceeding 20% of such wage or salary. California
resident employees electing to participate in the plan may purchase a
number of shares having an aggregate purchase price not exceeding 40%
of their annual base wage or salary on the date of purchase at a
specified price.

Participating employees can elect to finance their purchase through
the Company for up to 20% of their annual base wage or salary over a
five-year period at an interest rate of 9.5%. Employee notes
receivable of $17.6 million existed at December 31, 1993 and were
classified in the stockholders' deficiency section. Shares issued
under the plans cannot be sold, transferred, assigned, pledged or
encumbered in any way for a period of two years from the date such
shares are paid for and delivered to participating employees. The
employees' purchase price is 85% of the market price on the date of
purchase. The difference between the employees' purchase price and
the market price is recorded as deferred compensation and is amortized
over five years.

The plans provide for the purchase of additional shares of common
stock up to 10% of the employee's annual base wage during the first
year of employment and 20% of the employee's annual base wage during
each subsequent calendar year. Such purchases may be financed through
the Company at the same terms as indicated above, as long as total
outstanding amounts previously financed do not exceed 10% of the
employee's annual base compensation.

Effective August 1, 1991, the Company suspended the mandatory portion
of the Employee Stock Purchase Plan for 60 days. Subsequent to the
expiration of the 60-day period, the Company indefinitely suspended
the Employee Stock Purchase Plan. The Company also suspended payroll
deductions related to the Employee Stock Purchase Plan as a result of
a 10% across the board reduction in wages which commenced August 1,
1991 for all employees whose wages had not been previously reduced.
The unpaid employee stock purchase notes continue to accrue interest.
The Company anticipates that the reorganization process will result in
the restructuring, cancellation and/or replacement of the interests of
its existing common and preferred stockholders.

(Continued)
F-31

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

The Bankruptcy process has caused the suspension of the Company's
profit sharing plan which covers all personnel. The plan provided
for the distribution of 15% of annual pre-tax profits to employees
based on each individual's base wage. The Company made no
distributions under the plan in 1993, 1992 or 1991.

The Company implemented a 401(k) defined contribution plan on
January 1, 1989, covering essentially all employees of the Company.
Participants may contribute from 1% to 10% of their pre-tax earnings
to a maximum of $8,994. The Company will match 25% of a participant's
contributions up to 6% of the participant's annual pre-tax earnings.
The Company's contribution expense to the plan totaled $2.1 million,
$2 million and $4.9 million in 1993, 1992 and 1991, respectively.

The Company provides no post-retirement benefits to its former
employees other than the continuation of flight benefits on a stand-
by, non-revenue basis; the cost of which is not material.
Additionally, no material post-employment benefits are provided.

(7) Convertible Preferred Stock
---------------------------

Annual dividends of $5.41 per share are payable quarterly on the
291,149 shares of voting Series B 10.5% convertible preferred stock.
Each preferred share is entitled to four votes and may be converted
into four shares of common stock subject to certain anti-dilution
provisions. The preferred shares are redeemable at the Company's
election, if the price of common stock is at least $19.32 per share,
at $51.52 per share plus unpaid accrued dividends plus a redemption
premium starting at 3% during 1991 and decreasing 1% per year to zero
during and after 1994. During 1993, the Series B convertible
preferred stock was converted into 1,164,596 shares of common stock.

Annual dividends of $1.33 per share are payable quarterly on the
73,099 shares of voting Series C 9.75% convertible preferred stock.
Such shares may be converted into an equal number of shares of common
stock subject to certain anti-dilution provisions. The preferred
shares are redeemable at the Company's election at $13.68 per share
plus unpaid accrued dividends plus a redemption premium starting at
4% during 1991 and decreasing 1% per year to zero during and after
1995.

Under Delaware law, the Company is precluded from paying dividends on
its outstanding preferred stock until such time as the Company's
stockholder deficiency has been eliminated.

At December 31, 1993, the Company was delinquent in the payment of
its sixth consecutive dividends on the Preferred Stock. See note 1
for a discussion of the potential effects of the Company's
reorganization upon preferred stock.

(Continued)
F-32

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

(8) Common Stock
------------

Certain "Rights" have been distributed to certain shareholders of
record on August 25, 1986. The Rights, which entitle the holder to
purchase one one-hundredth (1/100th) of a share of Series D
Participating Preferred Stock at a price of $200, are not exercisable
unless certain conditions relating to a possible attempt to acquire
the Company are met. In the event of an acquisition or merger, the
Rights will entitle the holder of a Right to purchase that number of
common shares of the acquiring or surviving entity having twice the
market value of the exercise price of each Right. The Rights expire
on August 24, 1996 and are redeemable at a price of $.03 per Right
under certain conditions.

The Board of Directors has authorized the purchase of up to 700,000
shares of the Company's common stock from time to time in open market
transactions. The Company has purchased and retired 348,410 shares as
of December 31, 1993 at an average per share price of $8.31.

(9) Stock Options and Warrants
--------------------------

The Company has an Incentive Stock Option Plan and has reserved
13,225,000 shares of common stock for issuance upon the exercise of
stock options granted under the plan. Of the total shares reserved,
10,350,000 shares are restricted for issuance to employees other than
certain management employees. Options are granted at fair market
value on the date of grant and generally become exercisable over a
five-year period, and ultimately lapse if unexercised at the end of
ten years.

Activity under the Incentive Stock Option Plan is as follows:

Incentive Stock Option Plan
----------------------------------------
Number of Options
----------------------
Key Other Option Price
Management Employees Per Share
---------- --------- ------------

Outstanding January 1, 1991 1,721,326 5,215,028 $2.50 - $13.06
Granted 52,000 2,434,880 $0.94 - $ 7.50
Canceled (254,025) (535,116) $1.38 - $12.81
Exercised (8,981) (1,860) $2.50 - $ 9.13
--------- --------- --------------
Outstanding December 31, 1991 1,510,320 7,112,932 $0.94 - $13.06
Granted - 414,060 $1.13 - $ 2.63
Canceled (183,700) (791,199) $0.27 - $13.06
--------- --------- --------------
Outstanding December 31, 1992 1,326,620 6,735,793 $0.94 - $13.06
Canceled (284,990) (1,005,192) $0.94 - $12.81
--------- ---------- --------------
Outstanding December 31, 1993 1,041,630 5,730,601 $0.94 - $13.06
========= ========== ==============

(Continued)
F-33

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

At December 31, 1993, options to purchase 3,731,608 shares were
exercisable at prices ranging from $0.94 to $13.06 per share under the
Incentive Stock Option Plan. Effective March 13, 1992, additional grants
under the Plan were suspended.

The Company has a Nonstatutory Stock Option Plan under which options
to purchase 3,785,880 shares of common stock at prices ranging from
$5.06 to $10.25 per share (fair market value on date of grant) have
been granted, of which 1,961,410 stock options are outstanding as of
December 31, 1993. During 1991, 40,000 options were granted at $6.00
per share. During 1993, 1992 and 1991, no options were exercised. At
December 31, 1993, all options were exercisable. Options expire 10
years from date of grant.

The Company had granted warrants and options to purchase 227,500
shares of common stock to members of the Board of Directors who are
not employees of the Company. At December 31, 1993, 110,000 options
are outstanding and exercisable through February 4, 1996 at prices of
$6.00 to $9.00 per share (fair market value at date of grant). No
warrants or options were granted or exercised during 1993, 1992 or
1991.

The Company has adopted a Restricted Stock Plan and has reserved
250,000 shares of common stock for issuance at no cost to key
employees. Grants that are issued will vest over a three to five-year
period. As of December 31, 1993, the Company granted 93,870 shares
and the related unamortized deferred compensation was $5,320. In
1991, the operation of the Restricted Stock Plan was suspended due to
the Company's reorganization.

(10) Supplemental Information to Statements of Cash Flows
----------------------------------------------------

Cash paid for interest, net of amounts capitalized, during the years
ended December 31, 1993, 1992 and 1991 was approximately $44 million,
$46 million and $33 million, respectively.

Cash paid for income taxes during the year ended December 31, 1993 was
$537,000.

Cash flows from reorganization items in connection with the Chapter 11
proceedings during the years ended December 31, 1993, 1992 and 1991
were as follows:

1993 1992 1991
---- ---- ----
(in thousands)

Interest received on cash accumulations $ 2,635 $ 2,030 $ 1,365
Professional fees paid for services
rendered (7,372) (11,346) (6,913)
D.I.P. financing issuance costs paid (1,378) (1,760) (2,660)

(Continued)
F-34

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

In addition, during the years ended December 31, 1993, 1992 and 1991,
the Company had the following non-cash financing and investing
activities:

1993 1992 1991
---- ---- ----
(in thousands)

Conversion of long-term debt to
common stock $ 1,938 $ 3,685 $ 27,898
======= ======= ========

Draws taken by third parties on letters
of credit $ - $11,201 $ 42,415
======= ======= ========

Equipment acquired through capital
leases $ 709 $ 437 $ 10,028
======= ======= ========

Notes payable issued to equipment
seller $ 818 $22,804 $106,510
======= ======= ========

Notes payable issued for administrative
claim settlements $11,597 $ - $ -
======= ======= ========

Preferred stock dividends declared
but unpaid $ - $ 1,672 $ 1,250
======= ======= ========

Accrued interest reclassified to
long-term debt $15,137 $16,443 $ 19,311
======= ======= ========

(11) Commitments and Contingencies
-----------------------------

(a) Leases
------

During 1991, the Company restructured its lease commitment for
Airbus A320 aircraft with the lessors. As a result of the
restructuring, the Company's obligation to lease ten A320
aircraft was canceled and the basic rental rate for twelve
aircraft was revised to provide for the repayment to the lessor
over a ten-year period of certain advanced credits received by
the Company which relate to the ten canceled aircraft.

(Continued)
F-35

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

In the third quarter of 1991, the Company requested a deferral of
rent and other periodic payments from its aircraft providers.
The deferral was requested in an effort to conserve cash and
improve the Company's liquidity position. As a condition of
securing the $78 million D.I.P. financing, the Company was
required to obtain from most aircraft providers rent, principal
and interest payment deferrals in excess of $100 million covering
the six-month period of June through November 1991. These
deferrals will generally be repaid with interest at 10.5% over
the remaining term of the lease or secured borrowing with
repayment commencing December 1991. At December 31, 1993 and
1992, the remaining unpaid deferrals are reported as follows:

December 31,
1993 1992
---- ----
(in thousands)

Accounts payable $ 7,567 $20,672
Other liabilities 31,425 28,196
Long-term debt 18,671 20,769
------- -------
$57,663 $69,637
======= =======

In the third quarter of 1992, the Company requested an additional
deferral of rent and other periodic payments from its aircraft
providers. The deferral was requested to assure sufficient
liquidity to sustain operations while additional debtor-in-
possession financing was obtained (note 4). The 1992 deferrals
will generally be repaid either without interest during the first
quarter of 1993 or with interest over a period of seven years.
At December 31, 1993 and 1992, the remaining unpaid deferrals are
reported as follows:

December 31,
1993 1992
---- ----
(in thousands)

Accounts payable $ 9,650 $17,528
Long-term debt 21,539 25,346
------- -------

$31,189 $42,874
======= =======

(Continued)
F-36

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

As of December 31, 1993, the Company had 66 aircraft under
operating leases with remaining terms ranging from four months to
20 years. The Company has options to purchase most of the
aircraft at fair market value at the end of the lease term.
Certain of the agreements require security deposits and
maintenance reserve payments. The Company also leases certain
terminal space, ground facilities and computer and other
equipment under noncancelable operating leases.

Future minimum rental payments for years ending December 31 under
noncancelable operating leases with initial terms of more than
one year are as follows:

(in thousands)

1994 $ 191,606
1995 182,236
1996 179,110
1997 169,797
1998 160,759
Thereafter 1,333,187
----------
$2,216,695
==========

Collectively, the operating lease agreements require security de-
posits with lessors of $8.1 million and bank letters of credit of
$17.7 million. The letters of credit are collateralized by
certain spare rotable parts with a net book value of $35.8
million and $17.6 million in restricted cash.

Rent expense (excluding landing fees) was approximately $245
million in 1993, $307 million in 1992 and $319 million in 1991.

(b) Revenue Bonds
-------------

Special facility revenue bonds have been issued by a municipality
used for leasehold improvements at the airport which have been
leased by the Company. Under the operating lease agreements,
which commenced in 1990, the Company is required to make rental
payments sufficient to pay principal and interest when due on the
bonds. The Company ceased rental payments in June 1991. The
principal amount of such bonds outstanding at December 31, 1992
and 1991 was $40.7 million. In October 1993, the Company and the
bondholder agreed to reduce the outstanding balance of the bonds
to $22.5 million and adjust the related operating lease
payments sufficient to pay principal and interest on the
reduced amount effective upon the confirmation of a plan of
reorganization. The remaining principal balance of $18.2 million
will be accorded the same treatment under the plan of
reorganization as a pre-petition unsecured claim. The Company
also agreed to make adequate protection payments in the amount of
$150,000 per month from August 1993 to plan confirmation.

(Continued)
F-37

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

At December 31, 1993, the Company had on order a total of 93
aircraft of the types currently comprising the Company's fleet,
of which 51 are firm and 42 are options. The table below details
such deliveries.

Firm Orders
------------------------------------
Option
1994 1995 1996 1997 Thereafter Total Orders Total
---- ---- ---- ---- ---------- ----- ------ -----

Boeing: 737-300 - - 4 2 - 6 10 16

757-200 - 4 3 - - 7 10 17

Airbus: A320-200 9 5 2 8 14 38 22 60
- - - -- -- -- -- --

Total: 9 9 9 10 14 51 42 93
= = = == == == == ==

The current estimated aggregate cost for these firm commitments
and options is approximately $5.2 billion. Future aircraft
deliveries are planned in some instances for incremental
additions to the Company's existing aircraft fleet and in other
instances as replacements for aircraft with lease terminations
occurring during this period. The purchase agreements to acquire
24 Boeing 737-300 aircraft had been affirmed in the Company's
bankruptcy proceeding. With timely notice to the manufacturer,
all or some of these deliveries may be converted to Boeing
737-400 aircraft. At December 31, 1993, eight Boeing 737
delivery positions had been eliminated due to the lack of a
required reconfirmation notice by the Company to Boeing leaving
16 delivery positions as reflected above. The failure to
reconfirm such delivery positions exposes the Company to loss of
pre-delivery deposits and other claims which may be asserted by
Boeing in the bankruptcy proceeding. The purchase agreements for
the remaining aircraft types have not been assumed, and the
Company has not yet determined which of the other aircraft pur-
chase agreements, if any, will be affirmed or rejected.

As part of the $68.4 million term loan (see note 4(a)), the
Company terminated an agreement to lease 24 Airbus A320 aircraft
and ultimately replaced it with a put agreement to lease up to
four such aircraft. The lessor is under no obligation to lease
such aircraft to the Company and has the right to remarket these
aircraft to other parties. Prior to its bankruptcy filing, the
Company also entered into a similar arrangement with another
lessor, whereby the Company terminated its agreement to lease 10
Airbus A320 aircraft and replaced it with a put agreement to
lease up to 10 Airbus A320 aircraft.

The put agreement related to the term loan requires the lessor to
notify the Company prior to July 1, 1994 if it intends to
require the Company to lease any of its put aircraft. The other
put agreement requires 180 days prior notice of the delivery of a
put aircraft. The agreement also provides that the lessor may
not put more than five aircraft to the Company in any one
calendar year. This put right expires on December 31, 1996. No
more than nine put aircraft (from both lessors combined) may be
put to the Company in one calendar year. The put aircraft are
reflected in the "Firm Orders" section of the table above.

(Continued)
F-38

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

The Investment Agreement provides that as partial consideration
for the cancellation of certain put rights, the lessor will
receive the right to require the Company to lease up to eight
aircraft prior to June 30, 1999.

The Company does not have firm lease or debt financing
commitments with respect to the future scheduled aircraft
deliveries (other than for the put aircraft referred to above).

In addition to the aircraft set forth in the chart above, the
Company also has a pre-petition executory contract under which
the Company holds delivery positions for four Boeing 747-400
aircraft under firm orders and another four under options. The
contract allows the Company, with the giving of adequate notice,
to substitute other Boeing aircraft types for the Boeing 747-400
in these delivery positions. As a result, the Company is still
evaluating its future fleet needs and is currently unable to
determine if it will substitute other aircraft types or reject
this agreement.

(d) Concentration of Credit Risk
----------------------------

The Company does not believe it is subject to any significant
concentration of credit risk. At December 31, 1993,
approximately 82% of the Company's receivables related to tickets
sold to individual passengers through the use of major credit
cards or to tickets sold by other airlines and used by passengers
on America West. These receivables are short-term,
generally being settled shortly after sale or in the month
following usage. Bad debt losses, which have been minimal in the
past, have been considered in establishing allowances for
doubtful accounts.

(12) Related Party Transactions
--------------------------

During 1989, the Company sold 486,219 shares of common stock at $6.31
and $9.79 to the stockholder that purchased 3,029,235 shares of common
stock at $10.50 in 1987 and $1 million of the Series C preferred stock
in 1985. This stockholder has the right to maintain a 20% voting
interest through the purchase of common stock from the Company at a
price per share which is the average market price per share for the
preceding six months. In 1990, the stockholder made direct purchases
on the open market to maintain its 20% voting interest. On
February 15, 1991, the stockholder purchased 253,422 shares of common
stock from the Company at $5.50 per share. No such purchases
occurred in 1993 or 1992.

The Company has entered into various aircraft acquisition and leasing
agreements with this stockholder at terms comparable to those obtained
from third parties for similar transactions. The Company leases 11
aircraft from this stockholder and the rental payments for such leases
amounted to $33.7 million in 1993, $33.8 million in 1992 and $18.1
million in 1991. At December 31, 1993, the Company was obligated to
pay $232 million under these leases through August 2003 unless
terminated earlier at the stockholder's option. In 1991, the
stockholder drew upon a $7.5 million letter of credit which had been
issued in its favor in lieu of a cash reserve for periodic heavy
maintenance overhauls. This cash deposit is included in other assets
at December 31, 1993 and 1992.

(Continued)
F-39

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

In addition, the stockholder participated as a lender in the
September 1992 D.I.P. Facility and advanced $10 million of the $53
million in total D.I.P. financing. In September 1993, the stockholder
was repaid the then outstanding balance of $8.3 million as a result of
not participating in the extension of the maturity date of the debt
financing.

In order to assist the Chairman of the Board with certain costs
associated with his service as chairman, the Company pays an office
overhead allowance of $4,167 per month to a company owned by the
chairman. During 1993 and 1992, such payments totaled approximately
$50,000 and $16,000, respectively.

Additionally, a former member of the Board of Directors provided
consulting services to the Company during 1993 and 1992 for which he
received fees of approximately $39,000 and $47,000, respectively.

(13) Restructuring Charges
---------------------

Restructuring charges consist of the following:

1992
----
(in thousands)

Write-off for certain assets related to station
closures or route restructuring $ 9,529
Provision for spare parts for aircraft types
no longer in service 12,651
Provision for employee severance 2,284
Loss on return of aircraft 6,852
-------

$31,316
=======

The restructuring charges were necessitated by aircraft fleet
reductions and other operational changes. The Company has reduced its
fleet to 85 aircraft and has reduced the number of aircraft types in
the fleet from five to three.

(Continued)
F-40

AMERICA WEST AIRLINES, INC., D.I.P.

Notes to Financial Statements

(14) Quarterly Financial Data (Unaudited)
------------------------------------

Summarized quarterly financial data for 1993 and 1992 are as follows
(in thousands of dollars except per share amounts):

1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
------- ------- ------- -------

Total operating revenues:
1993 $316,605 $324,910 $335,113 $348,736
1992 $337,050 $333,511 $321,590 $301,989
Operating income (loss):
1993 $ 17,168 $ 25,179 $ 32,981 $ 45,726
1992 (a) $ (7,974) $(15,979) $(48,534) $ (2,325)
Nonoperating expense, net
1993 $(14,990) $(14,710) $(18,285) $(35,145)
1992 (b) $ (2,010) $(17,390) $(22,230) $(15,319)
Income tax expense
1993 $ (44) $ (209) $ (293) $ (213)
1992 $ - $ - $ - $ -
Net income (loss)
1993 $ 2,134 $ 10,260 $ 14,403 $ 10,368
1992 $ (9,984) $(33,369) $(70,764) $(17,644)
Earnings (loss) per share
1993:
Primary $ .09 $ .41 $ .56 $ .40
Fully diluted $ .09 $ .28 $ .38 $ .28
1992:
Primary $ (0.44) $ (1.41) $ (2.97) $ (0.75)

(a) During the third quarter of 1992, restructuring charges for
employee separation costs, losses related to returning aircraft
to lessors, write-off of assets related to the restructuring and
a loss provision related to spare parts expected to be sold
amounting to $31.3 million was recorded.

(b) During the first quarter of 1992, a gain of $15 million was
recorded for the transfer of the Honolulu/Nagoya route to another
carrier.

F-41

Item 9 Changes in and Disagreements with Accountants on Accounting and
------ ---------------------------------------------------------------
Financial Disclosure.
--------------------

During the last two fiscal years, the Company has not filed a Form 8-K
to report a change in accountants because of a disagreement over accounting
principles or procedures, financial statement disclosure, or otherwise.

PART III

Item 10. Directors and Executive Officers of the Registrant.
------- --------------------------------------------------

Information respecting the names, ages, terms, positions with the
Company and business experience of the executive officers and the directors
of the Company as of February 28, 1994, is set forth below. Each director
has served continuously with the Company since his first election.

Director Term
Name Age Position Since Expires (3)
---- --- -------- -------- -----------

William A. Franke 57 Chairman of the 1992 1994
Board And Chief
Executive Officer

A. Maurice Myers 53 President, Chief 1994 1994
Operating Officer
and Director

Thomas P. Burns 52 Senior Vice N/A N/A
President-Sales and
Marketing Programs

Alphonse E. Frei 55 Senior Vice N/A N/A
President-Finance;
Chief Financial
Officer

Martin J. Whalen 53 Senior Vice N/A N/A
President-
Administration and
General Counsel
Frederick W. Bradley,
Jr.(1)(2) 67 Director 1992 1992

O. Mark
De Michele(2) 60 Director 1986 1993

Samuel L.
Eichenfield(2) 57 Director 1992 1992

Richard C.
Kraemer(1) 49 Director 1992 1993

James T.
McMillan(1)(2) 68 Director 1993 1993

John R. Norton
III(1) 64 Director 1992 1992

John Tierney(1) 48 Director 1993 1993

Declan Treacy(2) 37 Director 1993 1994

-------------

(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) The Company has not held a meeting of its stockholders in since May
1991 to elect directors. Accordingly, each director, including
those directors with terms expiring in 1992, 1993 and 1994, shall
serve until either their resignation or the later of (i) his term
expiration or (ii) such time as his successor is duly elected and
qualified.

William A. Franke was named Chairman of the Board of Directors in
-----------------
September 1992. On December 31, 1993, Mr. Franke was elected to also serve
as the Company's Chief Executive Officer. In addition to his
responsibilities at America West, Mr. Franke serves as president of the
financial services firm, Franke & Co., a company he has owned since May
1987. From November 1989 until June 1990, Mr. Franke served as the
Chairman of Circle K Corporation's executive committee with the
responsibility for Circle K Corporations's restructure. In May 1990, the
Circle K Corporation filed a voluntary petition to reorganize under Chapter
11 of the Bankruptcy Code. From June 1990 until August 1993, Mr. Franke
served as the chairman of a special committee of directors overseeing the
reorganization of the Circle K Corporation. Mr. Franke has also served in
various other capacities at Circle K Corporation since 1990. Mr. Franke
was also involved in the restructuring of the Valley National Bank of
Arizona (now Bank One Arizona). Mr. Franke also serves as a director of
Phelps Dodge Corp. and Central Newspapers Inc.

A. Maurice Myers was named president and chief operating officer on
----------------
December 31, 1993 and was named to the Board of Director in 1994. Prior to
joining America West, Mr. Myers was the president and chief executive
officer of Aloha Airgroup, Inc. an aviation services corporation which owns
and operates Aloha Airlines and Aloha IslandAir. Mr. Myers joined Aloha in
1983 as vice president of marketing and became its president and chief
executive officer in June 1985. Mr. Myers is a member of the boards of
directors of Air Transport Association of America and Hawaiian Electric
Industries.

Thomas P. Burns has served as Senior Vice President-Sales and Marketing
---------------
since August 1987. Mr. Burns joined the Company in April 1985 as Vice
President-Sales. Mr. Burns was employed for 25 years by Continental
Airlines in various sales and passenger service positions. From 1982 to
1983, he was employed as North American Manager of Sales for UTA, a French
airline. Mr. Burns returned to Continental from 1983 through March 1985,
where he served as Director of International Sales prior to joining the
Company.

Alphonse E. Frei has been Senior Vice President-Finance and Chief
----------------
Financial Officer since April 1985. He joined the Company in April 1983 as
Vice President-Controller. Prior to that time he had 23 years of experience
at Continental Airlines where he held a variety of management positions in
finance and data processing. Mr. Frei served as a member of the Company's
Board of Directors from 1986 to 1992. Mr. Frei is also a member of the
board of directors of Swift Transportation Co., Inc.

Martin J. Whalen has been Senior Vice President-Administration and
----------------
General Counsel of the Company since July 1986. From 1980 until July 1986,
Mr. Whalen was employed by McDonnell Douglas Helicopter Company and its
predecessors, most recently as Vice President of Administration. He also
held positions in labor relations, personnel and legal affairs at Hughes
Airwest and Eastern Airlines.

Frederick W. Bradley, Jr. has served as a member of the Board of
-------------------------
Directors since September 1992. Immediately prior to joining the Board of
Directors, Mr. Bradley was a senior advisor with Simat, Helliesen &
Eichner, Inc. Mr. Bradley formerly served as senior vice president of
Citibank/Citicorp's Global Airline and Aerospace business. Mr. Bradley
joined Citibank/Citicorp in 1958. In addition, Mr. Bradley serves as a
member of the board of directors of Shuttle, Inc. (USAir Shuttle) and the
Institute of Air Transport, Paris, France. Mr. Bradley also serves as
chairman of the board of directors of Aircraft Lease Portfolio

Securitization 92-1 Ltd. and as President of IATA's International Airline
Training Fund of the United States.

O. Mark De Michele has served as a member of the Board of Directors
------------------
since 1986 and is president, chief executive officer and a director of
Arizona Public Service Company. Mr. De Michele joined Arizona Public
Service Company in 1978 as vice president of corporate relations, and also
served as its chief operating officer and an executive vice president. Mr.
De Michele is also a member of the board of directors of the Pinnacle West
Capital Corporation.

Samuel L. Eichenfield has served as a member of the Board of Directors
---------------------
since September 1992 and is chairman of the board of directors and chief
executive officer of GFC Financial Corporation. Mr. Eichenfield has also
served as chief executive officer of Greyhound Financial Corporation, a
subsidiary of GFC Financial Corporation, since joining GFC in 1987.

Richard C. Kraemer has served as a member of the Board of Directors
------------------
since September 1992 and is president and chief operating officer of UDC
Homes, Inc. Mr. Kraemer is also a member of the UDC Homes, Inc. board of
directors. Prior to joining UDC Homes, Inc. in 1975, Mr. Kraemer held a
variety of positions at American Cyanamid Company.

James T. McMillan has served as a member of the Board of Directors since
-----------------
December 1993. Mr. McMillan joined McDonnell Douglas Finance Corporation
as its president in 1968 and retired as its chairman of the board in 1991.
Mr. McMillan also served in various capacities for the McDonnell Douglas
Corporation from August 1954 until August 1990, most recently as a Senior
Vice President and Group Executive.

John R. Norton III has served as a member of the Board of Directors
------------------
since September 1992 and was former Deputy Secretary of the United States
Department of Agriculture from 1985 to 1986. Mr. Norton is currently a
principal of J.R. Norton Company, an agricultural and real estate. Mr.
Norton is also a member of the board of directors of Aztar Corp., Pinnacle
West Capital Corporation, Arizona Public Service Company and Terra
Industries, Inc.

John F. Tierney has served as a member of the Board of Directors since
---------------
December 1993. Mr. Tierney is the Assistant Chief Executive and Finance
Director of GPA Group plc, an Irish aircraft leasing concern, and has
served GPA Group plc in various such capacity since 1981. See Certain
Relationships and Related Transactions.

Declan Treacy has served as a member of the Board of Directors since
-------------
December 1993. Mr. Tierney is the General Manager - Corporate Finance of
GPA Group plc, an Irish aircraft leasing concern, and has served GPA Group
plc in various such capacity since 1988. See Certain Relationships and
Related Transactions.

In February 1993, the Company and its debtor-in -possession lenders
amended the terms of D.I.P. financing and in connection therewith the
Company and certain of such lenders entered into an Amended and Restated
Management Letter Agreement pursuant to which such lenders shall have a
right to approve the membership of the Company's Board of Directors. Under
the terms of such letter agreement GPA has the right to appoint two members
to the Board of Directors, the remaining D.I.P. lenders (except Kawasaki)
have the right to appoint five members to the Board of Directors, one
member of the Board must be a member of America West management and two
members must be independent.

The Compensation Committee of the Board of Directors, which met ten
times during 1993 reviews all aspects of compensation of executive officers
of the Company and makes recommendations on such matters to the full Board
of Directors. In addition, the Compensation Committee reviews and approves
all compensation and employee benefit plans, the Company's organizational
structure and plans for the development of successors to corporate officers
and other key members of management.

The Audit Committee, which met nine times during 1993, makes
recommendations to the Board concerning the selection of outside auditors,
reviews the financial statements of the Company and considers such other
matters in relation to the internal and external audit of the financial
affairs of the Company as may be necessary or appropriate in order to
facilitate accurate and timely financial reporting. The Company does not
maintain a standing nominating committee or other committee performing
similar functions.

During the fiscal year ended December 31, 1993, the Board of Directors
of the Company met on twenty-nine occasions. During the period in which he
served as director, each of the directors attended 75 percent or more of
the meetings of the Board of Directors and of the meetings held by
committees of the Board on which he served.

Item 11. Executive Compensation.
------- ----------------------

The table below sets forth information concerning the annual and long-
term compensation for services in all capacities to the corporation for the
fiscal years ended December 31, 1993, 1992 and 1991, of those persons who
were, at December 31, 1993 (i) the chief executive officer and (ii) the
other four most highly compensated executive officers of the Corporation
(the "Named Officers"):

SUMMARY COMPENSATION TABLE

Annual Compensation
--------------------

Other All
Annual Other
Compen- Compen-
Name and Principal Position Year Salary sation(2) sation(3)
--------------------------- ---- -------- --------- ---------

William A. Franke(1) 1993 $450,000 -0- -0-
Chairman of the Board and Chief 1992 $131,250 -0- -0-
Executive Officer 1991 N/A N/A N/A

Thomas P. Burns 1993 $123,200 $4,004 $2,182
Senior Vice President-Sales and 1992 $123,200 -0- $2,182
Marketing 1991 $125,767 -0- N/A

Alphonse E. Frei 1993 $156,800 $5,096 $2,182
Senior Vice President-Finance and 1992 $156,800 -0- $2,182
Chief Financial Officer 1991 $160,067 -0- N/A

Don Monteath(4) 1993 $156,800 $5,096 $2,182
Senior Vice President- 1992 $156,800 -0- $2,182
Operations 1991 $160,067 -0- N/A

Martin J. Whalen 1993 $134,000 $4,368 $2,016
Senior Vice President- 1992 $134,000 -0- $2,016
Administration and General Counsel 1991 $137,200 -0- N/A

Michael J. Conway(5) 1993 $432,000 $8,250 $2,182
Former Chief Executive Officer and 1992 $432,000 -0- $2,182
President 1991 $444,000 -0- N/A

----------------
(1) Mr. Franke was elected Chairman of the Board on September 17, 1992
and was elected Chief Executive Officer on December 31, 1993.

(2) Represents amount paid pursuant to the Company's transition pay
program.

(3) Consists of Company contributions to the Company's 401(k) Plan on
behalf of the Named Officer.

(4) Mr. Monteath resigned as Senior Vice President-Operations in
February 1994.

(5) Mr. Conway was replaced as the President and Chief Executive
Officer on December 31, 1993.

Option Plan Information
-----------------------

During the fiscal year ended December 31, 1993, none of the Named
Officers exercised any options. All options held by the Named Officers
have exercise prices greater than the fair market value of the Common Stock
on December 31, 1993.

The following table sets forth information with respect to the Company's
Restated Nonstatutory Stock Option Plan ("NSOP") and Incentive Stock Option
Plan ("ISO") as of the fiscal year ended December 31, 1993 with respect to
the Named Officers.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND
OPTION/SAR VALUE AS OF DECEMBER 31, 1993

Number of Unexercised
Options at Fiscal Year End
---------------------------
Name Plan Exercisable Unexercisable
---- ---- ----------- -------------

William A. Franke NSOP -0- -0-
ISO -0- -0-

Thomas P. Burns NSOP 109,640 -0-
ISO 17,300 -0-

Alphonse E. Frei NSOP 191,560 -0-
ISO 20,000 -0-

Don Monteath NSOP 206,560 -0-
ISO 21,000 -0-

Martin J. Whalen NSOP 143,480 -0-
ISO 12,033 -0-

Michael J. Conway NSOP 717,400 -0-
ISO 28,000 -0-

Termination of Employment Arrangements
--------------------------------------

The Company has made certain Termination of Employment Arrangements
in keeping with its practice under its July 26, 1991 Termination of
Employment Guidelines, as amended:

In connection with the termination of employment of Mr. Michael J.
Conway as an officer of the Company, the Company agreed to pay Mr.
Conway $503,000 in termination allowances, payable as an initial
severance payment in the amount of $304,200, an additional $163,800
in six monthly installments of $27,300 each, and a $35,000 transition
expense allowance. The Company also agreed to continue the payment
until December 31, 1994, of premiums aggregating about $33,000 on
certain life insurance policies owned by Mr. Conway. The foregoing
payments were in addition to continuation of medical insurance benefits
and certain other fringe benefit arrangements.

In connection with the termination of employment of Mr. Don Monteath
as an officer of the Company, the Company agreed to pay Mr. Monteath a
severance payment of $168,862. This payment was in addition to
continuation of medical insurance benefits and certain other fringe
benefit arrangements.

Director Compensation
---------------------

Each non-employee director at December 31, 1993, is compensated as
follows: an annual retainer of $25,000 plus $1,000 for each Board meeting
attended, $1,000 for each committee meeting attended and reimbursement for
expenses incurred in attending the meetings. Directors are also entitled to
certain air travel benefits.

Other Agreements
----------------

Mr. Franke, Chairman of the Board of Directors, is also the president of
the financial services firm, Franke & Co. In order to assist Mr. Franke
with certain costs associated with his service as Chairman and Chief
Executive Officer, the Company pays Franke & Co. an office overhead
allowance of $4,167 per month.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
------- --------------------------------------------------------------

The following table sets forth information, as of March 15, 1994,
concerning the capital stock beneficially owned by each director of the
Company, by each of the named executive officers, by the directors and
executive officers of the Company as a group, and by each Stockholder known
by the Company to be the beneficial owner of more than five percent of the
Common Stock or Preferred Stock.

Shares
Beneficially Owned(1) Percent of Class(1)
--------------------- -------------------
Name Common Preferred Common Preferred
------------------------- ------ --------- ------ ---------

William A. Franke -0- *

A. Maurice Myers -0- *

Thomas P. Burns 168,810

Alphonse E. Frei 214,171 *

Don Monteath 227,560 *

Martin J. Whalen 155,571 *

Frederick W. Bradley, Jr. -0- *

Michael J. Conway(2) 826,518 3.2%

O. Mark De Michele 20,200 *

Samuel L. Eichenfield -0- *

Richard C. Kraemer -0- *

James T. McMillan -0- *

John R. Norton, III -0- *

John F. Tierney -0- *

Declan Treacy -0- *

Transpacific Enterprises,
Inc.(3)
Common Stock 3,527,876 12.2%
Series C Preferred Stock 73,099 100%

Shares
Beneficially Owned(1) Percent of Class(1)
--------------------- -------------------
Name Common Preferred Common Preferred
------------------------- ------ --------- ------ ---------

Merrill Lynch Asset
Management, Inc.(4)
Debentures 3,604,496 12.5%

Continental Assurance
Company(5)
Debentures 1,428,571 5.3%

Lehman Brothers Inc.(6)
Common Stock 1,463,025 6.0%
Debentures 3,147,172 11.1%

All executive officers and
directors as a group
(17 persons) 1,826,680 6.8%

-------------

* Less than 1%.

(1) Except where specifically indicated, assumes the conversion of the
Company's 7 3/4% Convertible Subordinated Debentures Due 2010,
7 1/2% Convertible Subordinated Debentures Due 2011 and 11 1/2%
Convertible Subordinated Debentures Due 2009 (collectively the
"Debentures"), and the exercise of all outstanding options and
warrants. As of March 15, 1993, the exercise price of all the
options and warrants held by the officers and directors exceeded
the fair market value of the Common Stock. The following directors
and executive officers of the Company hold exercisable options
and/or warrants to purchase, and Debentures convertible into, the
number of shares of Common Stock set forth in parentheses: Mr.
Burns (126,940), Mr. Frei (211,560), Mr. Monteath (227,560), Mr.
Whalen (155,513), Mr. Conway (745,400) and Mr. De Michele (15,000).
All officers and directors as a group hold Debentures convertible
into and exercisable options and/or warrants to purchase 1,697,992
shares of Common Stock.

(2) Represents America West's estimates. Mr. Conway was replaced as
the Company's President and Chief Executive Officer on December 31,
1993 and resigned as a member of the Board of Directors effective
January 31, 1994.

(3) Address: 110-110th Avenue North East, Suite 509, Bellevue,
Washington 98004. The foregoing are amounts as reported on a
Schedule 13D dated February 15, 1994 filed with the Commission.
Shares beneficially owned, include shares of Common Stock owned by
Transpacific and by its affiliates. Not included in the amount set
forth above are 128,000 shares of Common Stock owned by a
subsidiary of a Transpacific affiliate. The shares of Preferred
Stock held by Transpacific are convertible into an equal number of
shares of Common Stock. Had such Preferred Stock been converted at
March 15, 1994, Transpacific would have held approximately 12.5
percent of the issued and outstanding Common Stock. Pursuant to an
agreement with the Company, Transpacific has a right

to maintain a 20 percent voting interest in the Company. As of
March 15, 1994, Transpacific had a 12.5 percent voting interest
in the Company.

(4) Address: 800 Scudders Mill Road, Plainsboro, New Jersey 08536.
Assumes the conversion of $49.6 million of Debentures into Common
Stock. The foregoing are amounts as reported on a Schedule 13G
dated March 11, 1988, filed with the Commission.

(5) Address: CNA Plaza, Chicago, Illinois 60685. Assumes the
conversion of $15 million of Debentures into Common Stock. The
foregoing are amounts as reported on a Schedule 13G dated
February 14, 1991, filed with the Commission.

(6) Address: 3 World Financial Center, New York, New York 10285. The
foregoing are amounts as reported on a Schedule 13G dated March 9,
1994 (the "Lehman 13G"). The Lehman 13G does not set forth their
specific Debenture and Common Stock holdings set forth herein.
However, the Company has independently verified the Debenture and
Common Stock holdings set forth above as of February 28, 1994. The
Lehman 13G also lists Lehman Brothers Holdings and America Express
Company as having beneficial ownership of the America West
securities disclosed in the Lehman 13G. American Express Company
disclaims such beneficial ownership.

Item 13. Certain Relationships and Related Transactions.
------- ----------------------------------------------

Transpacific Enterprises, Inc., an affiliate of Ansett Airlines of
Australia ("Ansett Airlines"), holds all the Company's Series C Preferred
Stock and certain shares of Common Stock. Pursuant to the terms of an
agreement between the Company and Transpacific, Transpacific has the right
to maintain a 20 percent voting interest in the Company through the
purchase of Common Stock from the Company. See Item 12. Security Ownership
-------
of Certain Beneficial Owners and Management. The Company presently leases
or subleases a total of eleven Boeing 737 aircraft from Ansett Airlines or
its affiliates for terms expiring at various dates through August 2003
(unless terminated earlier at Ansett's option). All of these leases were
renegotiated in 1992 resulting in reduced rents and extended terms (Ansett
may upon 90 days notice to the Company terminate any lease during the
extension periods). As of December 31, 1993, the Company was obligated to
pay approximately $232 million over the respective terms of these aircraft
leases.

Ansett Worldwide Aviation U.S.A. ("Ansett"), an affiliate of
Transpacific and Ansett, provided the Company with $10 million of the
September 1992 D.I.P. financing. In connection with such loan, Ansett
received the right to designate one member to the Company's Board of
Directors. Ansett was repaid in full in September 1993 and Tibor Sallay,
Ansett's designated director, resigned from the Company's Board of
Directors concurrent with such repayment.

Affiliates of GPA Group, plc ("GPA") have loaned the Company
approximately $70 million of D.I.P. financing. Under the terms of the
D.I.P. financing documents, GPA has the right to designate two members to
the Company's board of directors. John F. Tierney and Declan Treacy
currently serve as GPA's designated directors. The Company presently
leases or subleases a total of sixteen Airbus A320 aircraft from GPA or its
affiliates for terms expiring at various dates through July 2013. As of
December 31, 1993, the Company was obligated to pay approximately $1.136
billion over the respective terms of these aircraft leases.

Effective January 1, 1994, Mr. A. Maurice Myers left his position as
President and Chief Executive Officer of Aloha Airlines, Inc. to join the
Company as President and Chief Operating Officer. The Employment Agreement
between the Company and Mr. Myers provides an initial two year term at a
base salary of $375,000 per year. Mr. Myers also received a $100,000
transition allowance. The Company has agreed to assist Mr. Myers in
purchasing a residence in Phoenix, Arizona by a loan of up to $200,000 and
to loan to Myers up to $500,000 if he elects to exercise options to acquire
stock of Aloha Airlines, Inc. The loans would be nonrecourse to Mr. Myers
but would be secured by such residence and stock. Upon confirmation of a
plan of reorganization during the term of Mr. Myers' employment, the Company
has agreed to seek Bankruptcy Court approval of payment to Mr. Myers of a
reorganization success bonus, and grant, pursuant to the plan of
reorganization, options to acquire shares of common stock in the reorganized
Company. The Company has also agreed to provide to Mr. Myers certain
retirement benefits, reduced for vested accrued benefits payable under
plans maintained by his former employer. If Mr. Myers' employment with
the Company is terminated or his responsibilities are materially altered
following a change in control, he is entitled to receive a severance payment
equal to 200% of his base salary and, for a period of 12 months, medical and
life insurance coverages as provided immediately prior to such termination.
Mr. Myers is entitled to participate in any incentive plans or other fringe
benefits provided by the Company to other key employees.

The Board of Directors has discussed and continues to discuss change of
control severance arrangements and a reorganization success bonus with Mr.
William A. Franke. It also has discussed and continues to discuss
reorganization success bonuses for other key employees of the Company.

It is the policy of the Company that transactions with affiliates be on
terms no less favorable to the Company than those obtainable from
unaffiliated third parties.

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
------- ---------------------------------------------------------------

(a) Financial Statements.
--------------------

(1) Report of KPMG Peat Marwick

(2) Financial Statements and Notes to Financial Statements of the
Company, including Balance Sheets as of December 31, 1993 and
1992 and related Statements of Operations, Cash Flows and
Stockholders' Equity (Deficiency) for each of the years in the
three-year period ended December 31, 1993

(b) Financial Statement Schedules.
-----------------------------

(1) Schedule V. Property, Plant and Equipment

(2) Schedule VI. Accumulated Depreciation, Depletion and
Amortization of Property, Plant and Equipment

(3) Schedule VIII. Valuation and Qualifying Accounts

(4) Schedule X. Supplementary Income Statement Information

Schedules not listed above and columns within certain Schedules have been
omitted because of the absence of conditions under which they are required
or because the required material information is included in the Financial
Statements or Notes to the Financial Statements included herein.

Exhibit
Number Description and Method of Filing
------ --------------------------------

3-A(1) Restated Certificate of Incorporation of the Company, dated May
19, 1988 - Incorporated by reference to Exhibit 3-A to the
Company's Schedule 13E-4 Issuer Tender Offer Statement (SEC File
No. 5-34444 ("13E-4")

3-A(2) Amendment to Restated Certificate of Incorporation of the Company
- Incorporated by reference to Exhibit 3-A(2) to the Company's
Report on Form 10-K for the year ended December 31, 1989 (the
"1989 10-K")

3-B Restated Bylaws of the Company, as amended through December 31,
1993 - Filed herewith
--------------

4-A(1) Certificate of Designation, Voting Powers, Preferences and Rights
of the Series of Preferred Stock of the Company, Designated
Series B Convertible Preferred Stock, dated March 15, 1984 -
Incorporated by reference to Exhibit 3-D of the Company's Form
S-1 Registration Statement (SEC File No. 2-89212)

4-B(1) Certificate of Designation, Voting Powers, Preferences and Rights
of the Series of Preferred Stock of the Company Designated Series
C 9.75% Convertible Preferred Stock, dated October 8, 1985 -
Incorporated by reference to Exhibit 3-E(1) of the Company's Form
S-1 Registration Statement (SEC File No. 33-3800) ("S-1 No.
33-3800")

4-B(2) Series C 9.75% Convertible Preferred Stock Certificate No. 1 for
73,099 Shares issued to Transpacific Enterprises, Inc., dated
October 9, 1985 - Incorporated by reference to Exhibit 3-E(2) to
S-1 No. 33-3800

4-C Form of Certificate of Designation, Voting Powers, Preferences
and Rights of the Series of Preferred Stock of the Company's
Designated Series D Participating Preferred Stock, dated July 23,
1986 - Incorporated by reference to Exhibit 1 of the Company's
Form 8-A Registration Statement (SEC File No. 0-12337) ("Form 8-A
No. 0-12337")

4-D Indenture dated as of August 1, 1985, between the Company and
First Interstate Bank of Arizona, N.A., as Trustee, including
form of 7 3/4% Convertible Subordinated Debenture due 2010 -
Incorporated by reference to Exhibit 4 to the Company's Form S-1
Registration Statement (SEC File No. 2-99206)

Exhibit
Number Description and Method of Filing
------ --------------------------------

4-E Form of Indenture dated as of March 15, 1986, between the
Company and First Interstate Bank of Arizona, N.A., as Trustee,
including form of 7-1/2% Convertible Subordinated Debenture due
2011 - Incorporated by reference to Exhibit 4-B to S-1 No.
33-3800

4-F Form of Indenture, dated as of December 15, 1988, between the
Company and First Interstate Bank of Arizona, N.A., as Trustee,
including form of 11 1/2% Convertible Subordinated Debenture due
2009 - Incorporated by reference to Exhibit T3C to the Company's
Form T-3 Application for Qualification of Indenture Under Trust
Indenture Act of 1939 (SEC File No. 22-19024)

4-G Amended and Restated Rights Agreement, effective as of July 23,
1986 and dated as of June 17, 1988, between the Company and First
Interstate Bank of Arizona, N.A., as Rights Agent - Incorporated
by reference to Exhibit 2 to Amendment No. 1 to Form 8-A filed on
Form 8 (SEC File No. 0-12337)

10-A(1)* America West Airlines, Inc. Stock Purchase Plan, as amended
through February 26, 1991 - Incorporated by reference to Exhibit
10-A(1) to the Company's Report on Form 10-K for the year ended
December 31, 1990 (the "1990 10-K")

10-A(2)* America West Airlines, Inc. Stock Purchase Plan for California
and Alberta Resident Employees, as amended through February 26,
1991 - Incorporated by reference to Exhibit 10-A(2) to the 1990
Form 10-K

10-A(3)* America West Airlines, Inc. Incentive Stock Option Plan, as
amended through February 27, 1990 - Incorporated by reference to
Exhibit 10-A(3) to the 1989 Form 10-K

10-A(4)* Restated Nonstatutory Stock Option Plan, as of February 27, 1990
- Incorporated by reference to Exhibit 10-A(4) to the 1989 Form
10-K

10-A(5)* Non-Employee Directors Stock Option Plan, as of June 27, 1989 -
Incorporated by reference to Exhibit 10-A(5) to the 1989 Form
10-K

10-A(6)* Restricted Stock Plan - Incorporated by reference to Exhibit
10-A(6) to the 1989 Form 10-K

10-A(7)* 1991 Incentive Stock Option Plan - Incorporated by reference to
Exhibit 10-A(7) to the 1990 Form 10-K

10-C(1)* Stock Purchase and Sale Agreement dated October 9, 1985, between
the Company and Transpacific Enterprises, Inc. - Incorporated by
reference to Exhibit 10-H to S-1 No. 33-3800

Exhibit
Number Description and Method of Filing
------- --------------------------------

10-C(2)* Stock Purchase and Sale Agreement dated July 31, 1987, between
the Company and Transpacific Enterprises, Inc. - Incorporated by
reference to Exhibit 10-E(2) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1987

10-D(1) Second Restated and Amended Letter of Credit Reimbursement
Agreement, dated as of April 27, 1990 among the Company, the
Industrial Bank of Japan, Participating Banks and Bank of America
National Trust and Savings Association - Incorporated by
reference to Exhibit 10-D(3) to the 1990 Form 10-K

10-D(2) Third Amendment to Second Restated and Amended Letter of Credit
Reimbursement Agreement - Incorporated by reference to Exhibit
10-D(4) to the 1990 Form 10-K

10-E Official Statement dated August 11, 1986 for the $54,000,000
Variable Rate Airport Facility Revenue Bonds - Incorporated by
reference to Exhibit 10.e to the Company's Report on Form 10-Q
for the quarter ended September 30, 1986

10-F(1) Trust Indenture dated July 1, 1989 between The Industrial
Development Authority of the City of Phoenix, Arizona and First
Interstate Bank of Arizona, N.A. - Incorporated by Reference to
Exhibit 10-D(8) to 1989 Form 10-K

10-F(2) Airport Use Agreement dated as of July 1, 1989 among the City of
Phoenix, The Industrial Development Authority of the City of
Phoenix, Arizona and the Company - Incorporated by reference to
Exhibit 10-D(9) to 1989 Form 10-K

10-F(3) First Amendment dated as of August 1, 1990 to Airport Use
Agreement dated as of July 1, 1989 among the City of Phoenix and
the Industrial Development Authority of the City of Phoenix,
Arizona and the Company - Incorporated by reference to Exhibit
10-(D)(9) to the Company's Report on Form 10-Q for the quarter
ended September 30, 1990 (the "9/30/90 10-Q")

10-G(1) Revolving Loan Agreement dated as of April 17, 1990, by and among
the Company, the Bank signatories thereto, and Bank of America
National Trust and Savings Association, as Agent for the Banks
(the "Revolving Loan Agreement") - Incorporated by reference to
Exhibit 10-1 to Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1990

10-G(2) First Amendment dated as of April 17, 1990 to Revolving Loan
Agreement - Incorporated by reference to Exhibit 10-(D)(10) to
the 9/30/90 10-Q

Exhibit
Number Description and Method of Filing
------- --------------------------------

10-G(3) Second Amendment dated as of September 28, 1990 to Revolving Loan
Agreement - Incorporated by reference to Exhibit 10-(D)(11) to
the 9/30/90 10-Q

10-G(4) Third Amendment dated as of January 14, 1991 to Revolving Loan
Agreement - Incorporated by reference to Exhibit 10-D(13) to the
1990 Form 10-K

10-H Airbus A320 Purchase Agreement (including exhibits thereto),
dated as of September 28, 1990 between AVSA, S.A.R.L. ("AVSA")
and the Company, together with Letter Agreement Nos. 1-10,
inclusive - Incorporated by reference to Exhibit 10-(D)(1) to the
9/30/90 10-Q

10-I Loan Agreement, dated as of September 28, 1990, among the
Company, AVSA and AVSA, as agent - Incorporated by reference to
Exhibit 10-(D)(2) to the 9/30/90 10-Q

10-J V2500 Support Contract Between the Company and IAE International
Aero Engines AG ("IAE"), dated as of September 28, 1990, together
with Side Letters Nos. 1-4, inclusive - Incorporated by reference
to Exhibit 10-(D)(3) to the 9/30/90 10-Q

10-K Spares Credit Agreement, dated as of September 28, 1990, Between
the Company and IAE - Incorporated by reference to Exhibit
10-(D)(4) to the 9/30/90 10-Q

10-L Master Credit Modification Agreement, dated as of October 1,
1992, among the Company, IAE International Aero Engines AG,
Intlaero (Phoenix A320) Inc., Intlaero (Phoenix B737) Inc., CAE
Electronics Ltd., and Hughes Rediffusion Simulation Limited -
Incorporated by reference to Exhibit 10-L to the Company's Report
on Form 10-K for the year ended December 31, 1992 (the "1992
10-K")

10-M(1) Credit Agreement, dated as of September 28, 1990 Between the
Company and IAE - Incorporated by reference to Exhibit 10-(D)(5)
to the 9/30/90 10-Q

10-M(2) Amendment No. 1 to Credit Agreement, dated March 1, 1991 -
Incorporated by reference to Exhibit 10-M(2) to the Company's
1992 10-K

10-M(3) Amendment No. 2 to Credit Agreement, dated May 15, 1991 -
Incorporated by reference to Exhibit 10-M(3) to the Company's
1992 10-K

10-M(4) Amendment No. 3 to Credit Agreement, dated October 1, 1992 -
Incorporated by reference to Exhibit 10-M(4) to the Company's
1992 10-K

Exhibit
Number Description and Method of Filing
------- --------------------------------

10-N(1) Form of Third Amended and Restated Credit Agreement dated as of
September 30, 1993, among the Company, various lenders, and
BT Commercial Corp. as Administrative Agent (without exhibits)
- Filed herewith
--------------

10-N(2) Form of Amended and Restated Management Letter Agreement,
dated as of September 30, 1993 from the Company to the
Lenders - Filed herewith
--------------

10-N(3) Form of Amendment to Amended and Restated Management Letter
Agreement; Consent to Amendment of Bylaws dated February 8,
1994 from the Company to the Lenders - Filed herewith
--------------

10-0(1) Cash Management Agreement, dated September 28, 1991, among the
Company, BT and First Interstate of Arizona, N.A. - Incorporated
by reference to Exhibit 10-D(21) to the 1991 10-K

10-O(2) First Amendment to Cash Management Agreement, dated December 1,
1991, among the Company, BT and First Interstate of Arizona, N.A.
- Incorporated by reference to Exhibit 10-D(22) to the 1991 10-K

10-O(3) Second Amendment to Cash Management Agreement, dated September 1,
1992, among the Company, BT, and First Interstate Bank of
Arizona, N.A. - Incorporated by reference to Exhibit 10-O(3) to
the Company's 1992 10-K

10-P Loan Restructuring Agreement, dated as of December 1, 1991
between the Company and Kawasaki - Incorporated by reference to
Exhibit 10-D(23) to the 1991 10-K

10-Q Restructuring Agreement, dated as of December 1, 1991 between the
Company and Kawasaki - Incorporated by reference to Exhibit 10-
D(24) to the 1991 10-K

10-R(1) A320 Put Agreement, dated as of December 1, 1991 between the
Company and Kawasaki - Incorporated by reference to Exhibit 10-
D(25) to the 1991 10-K

10-R(2) First Amendment to A320 Put Agreement, dated September 1, 1992 -
Incorporated by reference to Exhibit 10-R(2) to the Company's
1992 10-K

10-S(1) A320 Put Agreement, dated as of June 25, 1991 between the Company
and GPA Group plc - Incorporated by reference to Exhibit 10-D(26)
to the 1991 10-K

10-S(2) First Amendment to Put Agreement, dated as of September 1, 1992 -
Incorporated by reference to Exhibit 10-S(2) to the Company's
1992 10-K

Exhibit
Number Description and Method of Filing
------- --------------------------------

10-T Restructuring Agreement, dated as of June 25, 1991 among GPA
Group, plc, GPA Leasing USA I, Inc., GPA Leasing USA Sub I, Inc.
and the Company - Incorporated by reference to Exhibit 10-D(27)
to the 1991 10-K

10-U Form of Interim Procedures Agreement dated as of March 11, 1994
between America West Airlines and AmWest Partners, L.P. -
Filed herewith
--------------

10-V For of Investment Agreement dated as of March 11, 1994 between
America West Airlines and AmWest Partners, L.P. - Filed herewith
--------------

11 Statement re: computation of net income (loss) per common share -
Filed herewith
--------------

12 Statement re: computation of ratio of earnings to fixed charges -
Filed herewith
--------------

23 Consent of KPMG Peat Marwick (regarding Form S-8 Registration
Statements) - Filed herewith
--------------

24 Powers of Attorney - See Signature Page

- ----------------

* Indicates management contract or compensatory plan or arrangement
required to be filed as an exhibit to this form.

(d) Reports on Form 8-K
-------------------

1. The Company filed with the Securities and Exchange Commission
a Form 8-K dated October 6, 1993 reporting information
concerning the extension of the D.I.P Financing to June 30,
1994 and the resignation of board members.

2. On October 26, 1993, the Company filed with the Securities and
Exchange Commission a Form 8-K reporting information that the
pilots voted in favor of being represented by the Air Line
Pilots Associations (ALPA).

Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

AMERICA WEST AIRLINES, INC.

Date: March 30, 1994 By /s/ A. E. Frei
---------------------------------------
Alphonse E. Frei
Senior Vice President - Finance

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William A. Franke, A. Maurice Myers and
Alphonse E. Frei, and each of them, his true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any and
all amendments to this Form 10-K Annual Report, and to file the same, with
all exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all intents and purposes as he might or
could do in person hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ William A. Franke Chairman of the Board of March 30, 1994
--------------------------- Director and Chief
William A. Franke Executive Officer

/s/ A. Maurice Myers President, Chief March 30, 1994
--------------------------- Operating Officer and
A. Maurice Myers Director

Signature Title Date
--------- ----- ----

/s/ A. E. Frei Senior Vice President-- March 30, 1994
--------------------------- Finance (Principal
Alphonse E. Frei Financial and Accounting
Officer)

/s/ O. Mark De Michele Director March 30, 1994
---------------------------
O. Mark De Michele

/s/ Frederick W. Bradley Director March 30, 1994
---------------------------
Frederick W. Bradley

/s/ Samuel L. Eichenfield Director March 30, 1994
---------------------------
Samuel L. Eichenfield

/s/ Richard C. Kraemer Director March 30, 1994
---------------------------
Richard C. Kraemer

/s/ James T. McMillan Director March 30, 1994
---------------------------
James T. McMillan

/s/ John R. Norton Director March 30, 1994
---------------------------
John R. Norton

/s/ John F. Tierney Director March 30, 1994
---------------------------
John F. Tierney

/s/ Declan Treacy Director March 30, 1994
---------------------------
Declan Treacy

AMERICA WEST AIRLINES, INC.
Schedule V -- Property, Plant and Equipment
Years ended December 31, 1993, 1992 and 1991
(in thousands of dollars)

Balance at Balance

beginning Additions at end
Classification of period at cost Retirements Transfers of period
- -------------- ---------- --------- ----------- --------- ----------

1993
- ----

Building and improvements. . . . . . . . . . $ 72,917 $ 71 $ (3,340) $ 1,482 $ 71,130
Flight equipment owned . . . . . . . . . . . 767,080 45,082 (19,922) 26,602 818,842
Leasehold improvements--Flight equipment . . 36,550 31 (1,183) 5,428 40,826
Ground property and equipment. . . . . . . . 111,131 1,303 (9,654) 2,111 104,891
Construction in progress . . . . . . . . . . 43,316 9,367 (38) (35,623) 17,022
---------- --------- ----------- --------- ----------
$1,030,994 $ 55,854 $ (34,137) $ - $1,052,711
========== ========= =========== ========= ==========

1992
- ----
Building and improvements. . . . . . . . . . $ 83,596 $ 341 $ (11,967) $ 947 $ 72,917
Flight equipment owned . . . . . . . . . . . 759,579 39,876 (33,192) 817 767,080
Leasehold improvements--Flight equipment . . 40,604 (63) (8,234) 4,243 36,550
Ground property and equipment. . . . . . . . 117,408 1,950 (9,083) 856 111,131

Construction in progress . . . . . . . . . . 23,955 28,034 (1,810) (6,863) 43,316

---------- --------- ----------- -------- ----------

$1,025,142 $ 70,138 $ (64,286) $ - $1,030,994
========== ========= =========== ======== ==========

1991
- ----
Building and improvements. . . . . . . . . . $ 87,287 $ 330 $ (9,863) $ 5,842 $ 83,596
Flight equipment owned . . . . . . . . . . . 768,728 86,033 (104,964) 9,782 759,579

Leasehold improvements--Flight equipment . . 35,516 2,547 (14,678) 17,219 40,604
Ground property and equipment. . . . . . . . 103,979 6,551 (936) 7,814 117,408
Construction in progress . . . . . . . . . . 27,139 42,351 (4,878) (40,657) 23,955
---------- --------- ----------- --------- ----------
$1,022,649 $ 137,812 $ (135,319) $ - $1,025,142
========== ========= =========== ========= ==========

AMERICA WEST AIRLINES, INC.
Schedule VI - Accumulated Depreciation,
Depletion and Amortization of Property, Plant, and Equipment
Years ended December 31, 1993, 1992 and 1991
(in thousands of dollars)

Additions
Balance at charged to Balance
beginning costs and at end of
Classification of period expenses Retirements period
-------------- ---------- ---------- ----------- ---------

1993
- ----
Building and improvements. . . . . . . . . . $ 18,163 $ 4,237 $ (1,309) $ 21,091
Flight equipment . . . . . . . . . . . . . . 226,972 59,896 (14,717) 272,151
Leasehold improvements - Flight equipment. . 16,493 4,137 (1,096) 19,534
Ground property and equipment. . . . . . . . 67,242 13,624 (7,866) 73,000
---------- ---------- ----------- ---------
$ 328,870 $ 81,894 $ (24,988) $ 385,776
========== ========== =========== =========

1992
- ----
Building and improvements. . . . . . . . . . $ 17,790 $ 4,763 $ (4,390) $ 18,163
Flight equipment . . . . . . . . . . . . . . 174,235 72,523 (19,786) 226,972
Leasehold improvements - Flight equipment. . 14,262 4,184 (1,953) 16,493
Ground property and equipment. . . . . . . . 55,466 16,202 (4,426) 67,242
---------- ---------- ----------- ---------
$ 261,753 $ 97,672 $ (30,555) $ 328,870
========== ========== =========== =========

1991
- ----
Building and improvements. . . . . . . . . . $ 15,418 $ 5,626 $ (3,254) $ 17,790
Flight equipment . . . . . . . . . . . . . . 133,526 67,750 (27,041) 174,235
Leasehold improvements - Flight equipment. . 15,542 6,073 (7,353) 14,262
Ground property and equipment. . . . . . . . 37,660 18,354 (548) 55,466
---------- ---------- ----------- ---------
$ 202,146 $ 97,803 $ (38,196) $ 261,753
========== ========== =========== =========

AMERICA WEST AIRLINES, INC.
Schedule VIII - Valuation and Qualifying Accounts
Years ended December 31, 1993, 1992, 1991
(in thousands of dollars)

Balance at Charged to Charged Balance
beginning costs and to other at end of
Description of period expenses accounts Deductions period
----------- ---------- ---------- -------- ---------- ---------

Allowance for doubtful receivables:
Years ended:

December 31, 1993. . . . . . . . . $2,542 $5,474 $ - $4,986 $3,030
====== ====== ====== ====== ======

December 31, 1992. . . . . . . . . $3,603 $3,800 $ - $4,861 $2,542
====== ====== ====== ====== ======

December 31, 1991. . . . . . . . . $1,203 $5,300 $ - $2,900 $3,603
====== ====== ====== ====== ======

Reserve for obsolescence:
Years ended:

December 31, 1993. . . . . . . . . $6,921 $ 902 $ - $ 592 $7,231
====== ====== ====== ====== ======

December 31, 1992. . . . . . . . . $3,638 $3,283 $ - $ - $6,921
====== ====== ====== ====== ======

December 31, 1991. . . . . . . . . $2,296 $1,342 $ - $ - $3,638
====== ====== ====== ====== ======

AMERICA WEST AIRLINES, INC.
Schedule X - Supplementary Income Statement Information
Years ended December 31, 1993, 1992, 1991
(in thousands of dollars)

ITEM 1993 1992 1991
- ---- ------- ------- -------

Advertising costs. . . . . . . . . . . . . . . $25,118 $25,007 $29,821
======= ======= =======

Aircraft maintenance materials and repairs . . $31,000 $38,366 $41,649
Amortization of deferred overhauls included
in depreciation and amortization. . . . . . 29,870 31,482 27,453
------- ------- -------
Maintenance and repairs. . . . . . . . . $60,870 $69,848 $69,102
======= ======= =======

Other items are not listed because they are either shown in the
financial statements or the amounts are less than 1% of revenues
for all periods.